Housing Starts And Permits Show Acceleration

Upward acceleration for residential investment is the indication from housing starts and permits. October starts just missed Econoday's consensus but at a 1.314 million annual rate they are, outside of August's 1.391 million, the strongest showing since May last year. Permits are the big positive in today's report, well above expectations at a 1.461 million rate which is the strongest since the subprime housing bubble in 2007.

Three-month averages for the key single-family category confirm the strength. Starts are running at a 923,000 rate on the average which is another 12-year high and up sharply over the last two months. Single-family permits are at an 888,000 rate which is likewise pivoting higher and also the strongest in 12 years.

Multi-family homes are further contributing to October's strength, up 8.6 percent for starts and 8.2 percent for permits. Another major plus in the report is a 10.3 percent surge in housing completions to a 1.256 million, offering immediate supply and a further boost to the new home market.

The housing sector broke out its year-and-a-half slump last quarter and looks to be breaking out further so far this quarter. Low mortgage rates and high levels of employment are two very strong positives for housing where emerging strength will help offset extending weakness in the global economy and domestic manufacturing.