October Housing Effect on US
October Housing Effect on US, just missed expectationsOctober Housing Market just missed expecations
The Housing Market Peaked in July 2018
I’ve been in the financial (international banking and accounting) for 22 years, thus seen plenty peak housing markets. I’m sharing my expert number with you to help you understand what is behind the numbers.
- U S Census Bureau Report
- Regional Housing
- Home Builders Housing
US Census Bureau Report
Tuesday morning, the U.S. Census Bureau reported that housing starts increased 1.5% month over month in October to a seasonally adjusted annual rate of 1.228 million, up from September’s revised rate of 1.21 million.
However, below expectations of an increase to a 1.23 million rate of sales. With October’s reading, housing starts are down 2.9% from the same time last year.
By Regional Basis
By region, on a monthly basis, total housing starts were up 32.9% in the Midwest (+5.0% YoY) and 4.7% in the South (-3.4% YoY).
However, working to offset these gains, starts fell 4.6% in West (+10.6% YoY) while plummeting 34.1% in the Northeast (-40.0% YoY).
Home Builders Housing
What the Home Builds looking at the the projections for Housing Market
As for building permits, units authorized in October fell 0.6% month over month to a seasonally adjusted annual rate of 1.263 million, in line with expectations of 1.26 million. This follows a revised September reading of 1.27 million. With September’s monthly decline, permits are down 6.0% from the same time last year.
Breaking the headline reading down further, permits for single unit homes fell 0.6% on a monthly basis while permits for complexes with two-to-four units fell 5.0% month over month in October. Permits issued for complexes with five or more units were unchanged from the previous month. By region, on a monthly basis, total permits advanced 21.1% in the Northeast (-5.0% YoY) and 9.4% in the Midwest (-5.1% YoY), while falling 2.4% in the South (+0.2% YoY) and 7.9% in the West (-17.2% YoY).
All in, I believe the reading serves to back our view that an aggressive Fed is making debt-inducing purchases such as homes, simply affordable due to the impact on mortgage rates, which increase monthly payments
– this is, in turn, causing builders to slow down on the pace of home starts in fear that demand will begin to wane in coming months.
The Fed is mostly in control of where we are and can speed the process up or slow it down depending on the pace of the action they take regarding rate hikes. The thinking is that given the prolonged lead times in building new developments, builders won’t continually start new projects if they fear an economic slowdown is on the horizon.