Starts jump to highest since October 2016
Housing starts came in above expectations rising 9.7% M/M to 1.326 million on an annualized basis.
- Starts are in a steady upward trend. The data is quite choppy and best viewed as a moving average to smooth out volatility. LendingTree prefers the 3-month average to balance timeliness with information value. The 3-month average of single-family starts of 893,000 is at its highest level since the financial crisis. The multi-family 3-month average is recovering having sunk to a 4-year low in September.
- Growth is being driven by tight inventory. Inventories are constrained in both the new home and existing markets. Building permits were the highest since 2007 as builders respond to the high demand. Builder confidence is high and construction jobs are increasing, all encouraging signs.
- Great start to 2018 after strong 2017. 2017 was the strongest year for homebuilding since 2007. The tax plan will also increase builder margins by 10-15%, encouraging more activity including at the lower end which has been underserved in the recovery.