US housing starts fell a second month in October, data out Wednesday showed.
Starts dropped 0.7% last month to a 1.52 million annual rate (figure below).
That was well below the 1.579 million consensus expected and nearly matched the lowest estimate from five-dozen economists.
September’s decline, the second-biggest since April as originally reported, was revised to show an even steeper drop. Starts dropped 2.7% that month, Wednesday’s revision showed.
Permits, on the other hand, rose to a 1.65 million annual rate, considerably higher than September and above the expected 1.63 million pace (figure below).
September witnessed the biggest drop in permits since February.
Single-family starts ran at a 1.039 million rate in October (figure below). It was the 15th month above 1 million (SAAR).
However, October’s monthly drop (nearly -4%) was the fourth consecutive. The pace was the weakest in 14 months. Every region saw a decline.
Data from Redfin (profiled here on Tuesday) suggests investors are encroaching on the housing market like never before. Institutions and businesses that purchase residential real estate bought more than 67,000 single-family homes in the third quarter. Generally speaking, they pay all cash.
Backlogs barely budged last month, although single-family authorizations rose 1.2% to a 1.069 million rate, the highest since May.
Notably (and this is the punchline), homes under construction but not yet completed rose again, to 1.45 million, the most in nearly a half century. The disparity illustrated in the figure (below) is remarkable.
October marked the fifth consecutive month that the number of homes under construction topped those completed.
The spread was the highest ever.
H-Man, buying a residential home in this market is a fool’s errand. Unless of course you sell it the following week.