EmailHousing starts jumped 15% in September, rising from 572,000 in August to 658,000. That is the highest level of new home construction since the home buyers tax credit artificially boosted production in April 2010. The Briefing.com consensus expected housing starts to increase to 595,000.
The gains in construction, however, do not seem to be sustainable.
Single family construction, which tends to be very stable, increased only 1.7%. That was the first increase in starts in two months and was in-line with the modest increase in overall housing starts expected by the consensus.
Multi-family construction, which is highly volatile, jumped 51.3% to 233,000 homes in September. Prior to the September gain, multi-family construction had averaged roughly 150,000 new starts each month since January. The number of multi-family starts in September was well outside the normal volatility range. This most likely will result in a sharp pull back in October.
It would not be surprising to see multi-family starts fall well below the long-term average in October to make up for the sizable September gain.
The number of homes under construction increased from 409,000 in August to 412,000 in September. That was the first increase since May 2006. Since GDP is calculated from put-in-place construction expenditures, the increase in the number of homes currently under construction will put upward pressure on our third quarter GDP forecast.
