The anticipation of a Federal Reserve rate hike earlier this month had global market analysts teetering on the edge of their seats. They breathed a collective sigh of relief after the Fed announced it would not being raising interest rates at this time, and the volatile market continues its march into uncertainty.
Housing starts are still one of the few bright spots for the US economy as soft global demand, a strong dollar and weak exports continue to hinder economic growth; housing starts for September were positive. Interestingly, lumber prices also continue to climb despite the expiration of the Softwood Lumber Agreement (SLA), confirming that housing is indeed on the rise.
September housing starts were at a seasonally-adjusted annual rate (SAAR) of 1,210,000 or 6.5 percent above the revised August estimate of 1,132,000. This number also represents a 17.5 percent increase over the September 2014 rate of 1,026,000.
Single-family construction continues to be sluggish; after posting a decline last month, this segment showed a moderate gain of just 0.3 percent above the revised August figure of 738,000. Most of September’s growth came in the form of multi-family housing, which surged over 18 percent to its highest level since June.
Single-family inventories remain tight, and rising rent prices are driving more potential buyers to the market. As we have noted before, a surge in single-family starts could do a lot to alleviate some of the associated costs of rising rents. “Builders are stepping up to meet that demand but doing so cautiously,” noted Stephen Stanley, chief economist at Amherst Pierpont Securities. “So, for beleaguered buyers who can’t find what they are looking for because of a dearth of listings, there is a bit of help on the way.”