Multi-family housing permits jump in October, builder confidence growing

Multi-family housing permits jump in October, builder confidence growing

Builders are increasingly confident in the housing market due to low interest rates and signs of economic recovery.

Housing starts dipped 2.8 percent in October, although building permits jumped 4.8 percent as builders focused increasingly on multi-family housing.

The U.S. Commerce Department released the data Wednesday, which indicated that October construction of homes fell to an annual rate of 1.009 million, compared to 1.038 million in September. The rate was still up 7.8 percent above the 936,000 pace a year before and about in the range that economists had expected, according to Forbes.

Building permits overall increased to a rate of 1.08 million, ahead of September’s 1.031 million rate. That is up 1.2 percent above last year, which was at 1.067 million.

The numbers indicate an intense focus by builders on multi-family housing, and away from constructing single-family homes. Permits issue for single-family homes increased just 1.4 percent to an annual rate of 640,000 in October, while permits for buildings that could hold five or more units increase 8 percent above September’s level to 406,000.

The actual groundbreakings for multi-family housing did drop, however, a full 15.5 percent in October versus a rise in single-family starts, a 4.2 percent increase.

The wide range in numbers may seem odd, but Forbes quoted a economist who noted that multi-family housing tends to be volatile month-to-month, and now that permits are strong in that category, there should be a notable increase in starts in November.

The National Association of Home Builders said this week that builder confidence increase four points to 58, which indicates see the market as increasingly favorable. Anything over 50 is above average.

An economist attributed the confidence to low interest rates and solid job creation. That momentum should continued into next year.

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