Housing starts climbed 25.5% in October to a seasonally adjusted annual rate of 1.323 million from September’s upward-revised estimate of 1.054 million, the Commerce Department reported Thursday. October’s figure is 23.3% higher than October 2015 and is the highest rate since August 2007.
Building permit authorizations, which indicate future construction activity, edged up 0.3% to 1.229 million in October from September’s adjusted rate of 1.225 million, and they are up 4.6% from a year ago.
Single-family starts climbed 10.7% to 869,000 in October from September’s (slightly) upward-revised 785,000 starts. The strength of this month’s report, however, is largely due to multifamily starts (with five or more units), which recovered from September’s nosedive with a nearly 75% increase month-over-month and a 28.2% rise year-over-year.
Housing starts reached their highest level in nearly a decade in October on the strength of a rebound in multifamily construction after it plummeted in September. October’s figure beat analyst expectations of 1.17 million considerably, according to MarketWatch, which noted that the month’s drastic swing is due in part to typical volatility in economic indicators.
The big swing back to growth in October came as a surprise, as industry watchers said the run-up to the Nov. 8 election was causing uncertainty in the market. Such was the case for the unchanged reading from October to November (63) in the National Association of Home Builders/Wells Fargo Housing Market Index, released Wednesday, which surveyed builders mostly before the election.
Meanwhile, the American Institute of Architects highlighted increased demand for design services in its Billings Index for October, also released Wednesday, as the index rebounded after two consecutive months of declines.
Multifamily’s September slump was credited to a projected cooling off in that market. Meanwhile, single-family starts are poised to continue their steady climb amid tight previously owned inventory conditions and a steady let-out of those properties into the market to meet a growing class of first-time buyers seeking to own homes.
For more housing news, sign up for our daily residential construction newsletter.