Most of the monthly decline is in volatile multi-dwelling segment
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Construction of new U.S. homes sank in October to the lowest level in 18 months, but the number of building permits issued rose slightly, the Commerce Department reported Wednesday.
Housing starts sank 11.7% to an annualized rate of 519,000 last month, with nearly all of the decline occurring in the volatile multi-dwelling segment. The last time the pace of housing starts was that low was in April 2009.
Yet construction on single-family homes, which account for 75% of the housing market, barely fell, according to the latest government data. Single-family starts dipped 1.1%.
Economists surveyed by MarketWatch had expected housing starts for October to drop to an annual rate of 600,000 on a seasonally adjusted basis. Starts in September were revised down to 588,000 from an original reading of 600,000.
Permits for new construction, a more accurate gauge of home building, rose 0.5% in October to an annualized rate of 547,000. Permits were also revised slightly higher in the prior month.
Housing starts are hard to measure and the data are often revised, sometimes sharply. Extreme swings in the U.S. economy — and big changes in government policy — have made it even harder to gauge the health of the housing market.
Starts soared last spring but plunged over the summer as temporary tax breaks expired, and they’d been creeping back up until October’s reversal.
The housing market plays a huge role in the U.S. It’s usually one of the first to weaken before a recession and one of the quickest to recover as growth resumes.
The housing industry also has wide-ranging influence on the rest of the economy, since so many raw materials and finished goods are required to build homes and furnish them once sold.
