US: Housing starts surged 25.5% in October, well above expectations - RBS
Research Team at RBS, notes that the United States overall housing starts came in well above expectations, surging 25.5% m/m to a 1.323 million (annualized) unit pace in October (consensus 1.156M, RBS 1.130M), and the prior two months were revised higher.
Key Quotes
“September starts are now reported at 1.054M (revised from 1.047M) and August starts are now at 1.164M (was 1.150M).”
“Moreover, the strength in starts reflected solid gains in both the singlefamily (up 10.7%m/m, after 8.4% in Sep) and the (often volatile) multifamily (68.8% after 38.9%) components. Until October, the uptrend in the singlefamily starts sector has been gradual.”
“Meanwhile, the singlefamily permits, a less volatile series than starts, component rose another 2.7% in October (to 762k) after a 0.8% gain in September. Some of strength probably exaggerates the underlying trend in activity. In fact, with the level of starts now well above the level of permits we are likely to see some pullback in starts.”
“However, these data are constructive for the sector as a whole and suggest the sector may have had a bit more positive momentum than other housing data have indicated, which is important given the latest backup in mortgage rates. Recent housing market index, which is based on a homebuilders’ sentiment survey, held up at a decent level in early November. The survey reflected responses from Nov 114, so that it included some responses in the wake of the election and the recent uptick in interest rates.”