US Housing starts: Multifamily boosts overall starts - Wells Fargo

Housing starts and building permits rebounded in November. Analysts at Wells Fargo, point out the increase was lead by a sharp increase in multifamily starts and permits. 

Key Quotes: 

“Total housing starts came in slightly stronger than expected and rose 3.2% during November. However, all of the monthly rise can be attributed to a 22.4% jump in the volatile multifamily segment. Single-family starts fell 4.6%, to an 824,000-unit pace. November marks the third consecutive monthly decline and brings single-family starts down to the lowest level since May 2017. Total starts were 3.6% lower year-over-year. This comparison is difficult, however, since November was the strongest month of 2017.”

“Revisions for the prior two months were positive on balance and on a year-to-date basis, total starts are up 5.1% compared to 2017.”

“Building permits also registered a strong monthly gain and rose 5.0%. Similar to starts, nearly all of the gain occurred in multifamily permits, which jumped 14.8%. Meanwhile, single-family permits edged up just 0.1%. Given the permits data, we expect single-family to remain sluggish and look for multifamily starts to remain near their recent levels.”

“After plunging eight points in November, the NAHB Housing Market Index fell four points to 56 in December. The index remains elevated relative to historical averages and the 67 average reading for 2018 is still roughly on par with 2017’s average of 68.”

“Builders have now reported weakening housing demand for the second consecutive month, and the sharp 12 point decline since October is the largest two-month drop since 2001.”