Bloomberg Econoday notes housing starts surged from a step decline of nine percent last month to a 25.5 percent jump this month.
In data that will lift estimates for fourth-quarter GDP, housing starts surged 25.5 percent in October to a 1.323 million annualized rate. This is the best rate of the cycle, since August 2007 with the monthly percentage gain the strongest since 1982. The jump reflects a 10.7 percent rise to an 869,000 rate for the report’s key component, single-family homes, that follows an 8.4 percent surge in September. And multi-family homes snapped back from September’s odd 39 percent decline, rising 69 percent in October to a 454,000 rate.
But there’s less strength in permits which, however, did rise 0.3 percent to a 1.229 million rate. Importantly, single-family permits are up 2.7 percent in the data to offset a 3.3 percent dip for multi-family homes.
There’s plenty of strength in this report but it’s centered in the near-term, less so in the coming months. Other data include a 5.5 percent gain for completions to a 1.055 million rate led here by a 9.7 percent gain for the multi-family component with single-family homes up a very solid 3.9 percent. Regionally the West, which is key region for builders, is showing the most strength in this report followed by the Midwest. The South is mixed and the Northeast is mostly soft.
Housing Starts Surge to 1959 Level
I have no quibbles with this Econoday report, but the above chart does provide needed perspective.
GDPNow Latest Forecast: 3.6 Percent — November 17, 2016
In response, to housing, the Atlanta Fed GDPNow Forecast for 4th Quarter GDP Jumps to 3.6%
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2016 is 3.6 percent on November 17, up from 3.3 percent on November 15. The forecast of fourth-quarter real residential investment growth increased from 4.5 percent to 10.8 percent after this morning’s new residential construction report from the U.S. Census Bureau.
Tomorrow we see the FRBNY Nowcast estimate from the New York Fed which greatly lags the above GDPNow forecast.
The FRBNY Nowcast for 4th quarter GDP is 1.6%. as of November 4th.
Mike “Mish” Shedlock