The Census Bureau and the U.S. Department of Housing and Urban Development said that new residential construction jumped from a revised 758,000 in August to 872,000 in September. This represents a 15 percent gain and the highest level since July 2008 and it finally moved past the 800,000 housing starts threshold, which was expected by year’s end and foreshadowed by the previous month’s permit figures. Even so, September’s reading was well above the consensus estimate by about 100,000 units.
Gains were made among both single-family and multi-family units. Single-family residential construction increased from 543,000 to 603,000 and multi-family starts rose from 215,000 to 269,000.
Most important, housing permits also increased significantly, up from 801,000 to 894,000. This suggests that the improvements in residential construction are expected to continue in the months ahead, with permitting a proxy for future activity. Permits were higher for both single-family and multi-family units.
Today’s news is a positive sign that the residential housing market continues to stabilize, with the sector being a bright spot in the economy this year. To keep it in perspective, housing starts were 594,000 in September 2010 and 647,000 in September 2011. This is good news for manufacturers – especially those who depend so heavily on construction and home furnishings – but it is also a strong positive for the larger macro economy.
Chad Moutray is chief economist, National Association of Manufacturers.