Housing starts fell 11.7% to an annual rate of 519,000, reflecting a 43.5% drop in starts of multi-family units and a 1.1% drop in single-family units to an annual rate of 431,000. Single-family starts have essentially held nearly steady for four straight months (see chart 3). The decline in multi-family starts was the culprit behind the weak headline reading. Multi-family starts are highly volatile and do not speak for the underlying trend of homebuilding activity.

Permit extensions, the gauge of future activity, rose 0.6% to annual rate of 550,000. Permits for new single-family homes posted the first increase (+1.0%) after six consecutive monthly declines (see chart 3), while permits issued for multi-family homes fell 0.7%, after a 13.7% drop in the prior month. These numbers bode poorly for single-family home building activity in November.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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