US housing starts extend rebound, rising to 4-year high

In October, US housing starts rose unexpectedly for a third consecutive month. Housing starts increased by 3.6% M/M to a total of 894 000, the highest level since July 2008. The consensus was looking for a correction to 840 000. National details show however a mixed picture as housing starts rose in the West (17.2% M/M) and Midwest (8.9% M/M), while they dropped in the Northeast (-6.5% M/M) and South (-2.5% M/M). Starts of multi-family units surged 11.9% M/M, while starts of single-family ones fell marginally, by 0.2% M/M. Building permits, on the contrary, dropped in October, after increasing sharply in September. Compared with September, building permits dropped by 2.9% M/M to a total level of 866 000, in line with expectations as the consensus was looking for a decline to 864 000. Weakness in permits was led by the Northeast (-12.5% M/M) and West (-10.7% M/M), while permits continued to increase in the Midwest (4.1% M/M) and South (0.7% M/M). Single family permits rose by 2.2% M/M, while multi-family ones fell by 10.6% M/M. Housing under construction rose by 1.8% M/M and housing completed surged by 14.5% M/M. The US Commerce Department said they believed the effects of the hurricane Sandy on October housing starts were minimal. After the strong September data, probably boosted by unusually warm weather, especially housing starts remained remarkably strong in October, but also permits held up well. Multi-family construction continues to profit from strong demand for rental housing, but also single family construction is starting to recover, adding to the signs that the US housing market recovery is gaining strength.