US Housing starts moderate in October, but building permits remain at healthy levels

Housing starts fell by 131 thousand to 1,060k units (annualized) in October, coming in considerably below expectations for 1,160k new units. Negative revisions subtracted 16k and 15k units from August and September tally, respectively.

Following a pullback in the previous month, building permits rose in October, advancing by 45k units to 1150k - nearly bang on the consensus expectation for 1,147k permits.

The bulk of the weakness in construction was concentrated in the volatile multi-family segment, where starts fell by 113k. Meanwhile, the single family construction softened only slightly, falling by 18k on the month.

Starts increased modestly in the Northeast (+13k) and the Midwest (+21k) regions, but weakened by 49k in the West and tumbled by a massive 116k in the South due to a sharp decline in multi-family construction.

"Notwithstanding monthly volatility, the near-term outlook for new residential construction remains favourable. Much of the slowdown in October can be chalked up to the volatile multi-family segment, while single family starts continue to hold up well. Supported by improving household formation and rising employment and incomes, the property market will continue making gradual headway in the months ahead", notes TD Economics.