October Housing Starts were down 0.3% from September but up 16.5% from October last year. Despite the slight drop, starts were better than most analysts expected. Permits for new construction saw strong gains, up 10.9% from September and 17.7% from October, 2010. Single family home starts were up 3.9% from September but down 0.9% from Octopber 2010. A lot of the strength is in apartment construction as well as in single family homes. Even with some recent gains which have taken starts and permits to the highest levels in the last 18 months, housing is still stuck at very low levels.
The long term chart of single family starts tells some of the tales. In the 1970s and 1980s housing bounced up and down with the economy as recessions sent starts plummeting and recoveries meant rebounding construction. From the end of the 1990-91 recession to the housing peak in 2006, starts were on one long upswing powered first by a strong economy and then by housing euphoria and generous mortgage terms. The bust erased all that and left us in the weakest homebuilding market in 50 or more years. Look carefully and you can hope to see some stability at the right hand edge of the picture. One hint of the future is that we’re not building enough houses to keep up with demand over the long run.