U.S. homebuilding rose in October thanks to a big expansion in apartment construction. But single-family homes fell for a second straight month, likely due to a combination of high prices and higher interest rates making homes less affordable.
Housing starts, which mark the beginning of a new construction project, rose 1.5 percent to a seasonally adjusted annual rate of 1.228 million units last month, the Commerce Department said on Tuesday.
While the starts figures were slightly below expectations they were nowhere near as bad as the sharp decline in homebuilder sentiment released Monday suggested. Plus, starts for August and September were revised up.
Permits, which are applications to start construction but do not always turn into actual housing starts, declined 0.6 percent from September but were actually better than expectations, at a 1.263 million rate. This is promising and a big relief after Monday’s scary sentiment figure.
Single-family homebuilding was weak, dropping 1.8 percent to a rate of 865,000 units in October. Single-family starts in the South, the biggest market for homebuilding, dropped 4.0 percent last month.
Starts for multi-family housing jumped 10.3 percent to a rate of 363,000 units in October. Permits declined to 0.5 percent to a pace of 414,000 units.
The mixed data show the housing market buffeted by the push an pull of various economic forces. High home prices, a tight labor market, and higher interest rates have made homebuying more expensive. At the same time, higher wages, low unemployment, and the tax cuts have given buyers more ability to spend. As well, a decline in lumber costs may have eased some of the costs faced by builders.