According to data recently reported jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, U.S. housing starts jumped 1.5% in October compared with the previous month.
Privately-owned housing starts hit 1.23 million in October, which marked a 2.9% decrease from October 2017 housing starts.
Single‐family housing starts in October hit 865,000, up 1.5% from September. The increase marks a bounce-back from the previous month, when housing starts fell 5.3% compared with August starts, impacted by natural disasters in September (namely Hurricanes Michael and Florence).
Privately‐owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1.26 million, according to the report, down 0.6% from September and down 6.0% from October 2017.
Housing completions in October were at a seasonally adjusted rate of 1.11 million, down 3.3% from September and down 6.5% year over year.
Broken down by region, housing starts in the Northeast (87,000) in October were down 40.0% year over year and 34.1% compared with September. In the Midwest, starts were up 5.0% year over year and 32.9% from September. In the South, starts were down 3.4% year over year and up 4.7% from September. Lastly, in the West, housing starts were up 17.6% year over year and down 2.0% on a month-over-month basis.
In other housing sector news, existing-home sales increased in October after six months of decreases, the National Association of Realtors reported.
However, it remains to be seen how the housing market will react to higher mortgage rates in 2019 and beyond.
According to Freddie Mac, which released its November forecast Thursday, the 30-year fixed-rate mortgage rate averaged 4.83% in October, with the most recent weekly reading hitting 4.94%, good for its highest level since early 2011.
“If new home sales are to resume growth in 2019, builders may have to shift their focus to more modestly priced homes and smaller sized homes to help offset housing affordability concerns,” said Sam Khater, Freddie Mac’s chief economist, in a release. “But with cost pressures pinching profitability, this will be a significant challenge.”