Housing Starts Up,
Existing Home Sales Cool in September

 

Construction starts and permits for single-family residences gained 11.0 and 6.7 percent respectively in September over the month prior, fueling strong overall gains. Existing home sales saw a mild monthly decline in September in all regions except the South, though sales rates remain well above 2011 levels. Home prices improved, and inventories shrank in preparation for the colder, slower winter months.

Single-unit and multi-unit housing starts in September combined for the best single month since July 2008.

Census data shows September housing starts were at a seasonally adjusted annual rate (SAAR) of 872,000 units, a 15 percent jump from the revised August estimate of 758,000 and 34.8 percent above the 647,000 rate set in September 2011. The new rate is the highest since July 2008.

Building permits also made strong gains, with an SAAR of 894,000, 11.6 percent above the revised August rate of 801,000 and 45.1 percent above the September 2011 estimate of 616,000.

Sales of existing homes, however, fell 1.7 percent in September to a seasonally adjusted annual rate of 4.75 million, down from an upwardly revised rate of 4.83 million in August. Declines were reported in all regions but the South, according to a National Association of Realtors report.

Though down for the month, sales are up 11 percent from the September 2011 rate. The median existing-home price also gained 11.3 percent year-over-year to $183,900, the largest annual gain since November 2005.

Inventories declined to 2.32 million units in September, a 3.3 percent decline that represents 5.9 months of supply at the current sales rate. The decline in housing inventories is typical due to approaching winter months, though September's reading is the first below six months since March 2006.

The comparable growth in both starts and building permits indicates that the growth the market has showed this year is sustainable and should continue. Though the housing market still has a long way to go before reaching nominally "healthy" levels – an annual rate closer to 1.5 million units – sustained growth could begin to show in the labor market in the coming months. Fiscal uncertainty at the federal level, however, will likely continue to paralyze much of the economy until lawmakers reach a deal.