Housing starts slump to near-record low
* Housing starts plunged 11.7% to a seasonally adjusted annual rate of 519,000 from 588,000 in September. That was far worse than the forecast for a rate of 598,000. Building permits inched up 0.5% to a SAAR of 550,000 from 547,000 a month earlier.
* The weakness was concentrated in the multifamily business, with multifamily starts plunging 43.5%. Single-family starts dipped a more moderate 1.1%. On the permitting front, multifamily was down 0.7% while single family inched up 1%, the first gain in several months.
* Regionally, starts dropped 13.4% in the South and 30.5% in the West. They rose 1% in the Midwest and 12.9% in the Northeast. Permits mirrored starts, with declines in the West (-0.9%) and South (-3.4%). Issuance flatlined in the Northeast and rose 14.3% in the Midwest.
The construction industry remains mired in the muck. Starts fell off the table in October, led by the volatile multifamily sector, while permit issuance continues to bounce around at depressed levels.
This should not come as a surprise. We have so many existing, distressed homes for sale already, and even more will hit the market once various foreclosure moratoriums expire. That means builders have little incentive to ramp up production, despite a stabilization in sales rates. It also means construction will not contribute meaningfully to any economic or employment recovery. Unfortunate, but true.