Housing starts rise as multifamily perks up

The September housing starts figures were just released and they popped by a surprising 15%. The 658,000 seasonally adjusted annual rate of starts was well ahead the median forecast of 590,000 and the highest since April 2010. We saw broad-based regional strength as well, led by the West with a gain of 18.1%.

However, the strength was mostly in the multifamily sector, where starts surged 51.3%. The less-volatile single-family market was more subdued, with a gain of only 1.7%. On the building permits front, we saw a slide in both the multifamily (-14.5%) and single-family (-0.2%) sectors. That left permits at a five-month low, portending a slowdown in future construction. The West led with a 9% decline in permits.

Construction of multifamily properties like apartments, condos, and town homes perked up in September, helping push housing starts to the highest level in 17 months. However, permitting activity slipped and the less-volatile single-family market remains subdued. So once again, we're left with a mixed bag of news on the housing front. It will take a more vigorous rebound in the labor market, an improvement in consumer confidence, and a loosening of lending standards to really rev up the housing market's engine again. Unfortunately, those forces don't appear to be coming together.