September Housing Starts Rebound Strongly, Reach Highest Level in 16 Years

Total housing starts surged by 13.3 percent in September to a seasonally adjusted annual rate of 1.84 million units, the highest in 16 years, according to Commerce Department figures. Solid gains were recorded for all regions of the country, more than recovering the ground lost during the three previous months, with single-family starts hitting a 24-year high.

“The housing market is rock solid and continues to hold up the economy,” said Gary Garczynski, a builder/developer from Woodbridge, Va., and president of the National Association of Home Builders (NAHB). “Although the pace of production will probably moderate to some degree in the months ahead, we should end the year with nearly 1.7 million units, up about 5 percent from the 1.6 million built last year.”

Garczynski attributed the impressive rebound largely to favorable interest rates on home mortgages and ongoing increases in house values. Rates on long-term contracts averaged 6.1 percent in September, and slipped below 6 percent toward the end of the month, hitting the lowest level since the mid-1960s. Garczynski noted that NAHB's latest survey of home builders, conducted in October, confirms that demand for new homes is holding firm. NAHB's Housing Market Index (HMI), released recently, posted the second highest reading of the year.

Single-family housing starts rose 18.2 percent in September to a seasonally adjusted annual rate of 1.48 million units. Meanwhile, multifamily starts dipped 2.9 percent to a rate of 366,000 units, partially taking back a big jump in the previous month. Regionally, starts rose across the board in September, posting gains of 24.2 percent in the West, 11.4 percent in the Midwest, 9.8 percent in the South and 9.5 in the Northwest.

Housing permits, a good indicator of future building activity, also rose in September, by 3.7 percent overall to a seasonally adjusted annual rate of 1.72 million units. Single-family permits rose 3.2 percent to 1.33 million units, while multifamily permits rose 5.1 percent to 388,000 units. Regionally, housing permits rose in the Northeast and the West, 14.3 and 12.8 percent respectively, while the Midwest and South registered declines of a little more than 1 percent.