US Housing Starts: Overall level will hold up fairly well for the year as whole – Wells Fargo

Housing data released on Tuesday in the US showed a rebound in Hosing Starts and Building Permits in September. The housing sector has been an early and clear bright spots of the re-opening economy, explained analysts at Wells Fargo. They argue home sales took off immediately after the lockdowns were lifted and new single-family construction fell less and recovered sooner than any other major industry.

Key Quotes: 

“Housing starts rose 1.9% in September, which was well-below expectations but close to our forecast. All the shortfall was in multifamily starts, which fell 16.3%. Single-family starts rose 8.5% to a 1.108-million unit pace.”

“The split in the housing market was clearly evident in September, when overall housing starts rose 1.9% to a 1.415-million unit pace following a 6.7% drop the prior month. The market consensus had called for a rise closer to 1.47-million units. All of the shortfall was in multifamily units, which tumbled 16.3% in September following a 25.9% plunge the prior month.”

“The overall level of starts will hold up fairly well for the year as whole. Single-family homebuilding is steadily gaining momentum. Starts rose for the fifth month in a row in September, climbing 8.5% to a 1.108-million unit pace.”

“Starts of projects with 2-4 units averaged 38,900 a year from 1997 to 2007 but have averaged just 12,400 units since 2010. The category appears to be a victim of more restrictive zoning rules and is one of the missing pieces of the affordable housing puzzle.”