Multi family a huge drag on housing starts

Oct Housing Starts were well below expectations at 519k annualized vs the forecast of 598k. It’s at the lowest level since Apr ’09 and was mostly led by a very sharp fall in the multi family category where starts fell to 83k from 147k, the lowest since Feb and is 82% below the peak in ’06. Single family starts fell modestly to 436k from 441k. Permits for both sectors were little changed from Sept and for the multi family area specifically, it implies a snap back in construction. Also, the secular drop in homeownership rates should also buoy multi family housing for years to come. In terms of single family starts and the high level of existing homes for sale, we should root for lower starts at the short term expense of a lower contribution to GDP from residential construction.

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