September’s starts and permits report, released today by the U.S. Census Bureau, was a jumble of good and bad news. Starts jumped 15.0% on a monthly basis to an annual rate of 658,000 and were up 10.2% from September 2010. Permits were down 5.0% on a national basis from the previous month, with an annual rate of 594,000, the lowest reading in five months. Annually, permit numbers were up 5.7%.
Almost all of the improvement in starts came from the multifamily sector, which saw a staggering 51.3% increase. While gains extended to all four regions, the South led the way with a 141% month-over-month jump. The West also reported an impressive gain with an increase of 52%.
However, the nature of multifamily projects—wherein a single project may contain hundreds of units, all of which are counted individually on the Census Bureau’s report—makes multifamily numbers susceptible to large swings. Permit activity lent some forward-looking perspective to the starts data, reporting that multifamily permits dropped 14.5% on a monthly basis to an annual rate of 177,000. And the starts report’s two big performers, the South and West, both reported significant multifamily permit declines, pointing to a drop off in the sector’s steep gains in coming months.
Among single-family projects, starts were up only 1.7% from August, despite regional monthly gains of 46.0% and 20.6% in the Northeast and Midwest, respectively. The weighty South tipped the scales downward, with a decline of 9.4%, while the West remained flat. On an annual basis, single-family starts were down 4.9%. Single-family permits were down 0.2% on a monthly basis and up 3.5% annually.
"On balance, this was a mixed report," wrote Patrick Newport, U.S. economist at IHS Global Insight, in a statement to investors. "The increase in starts is good for GDP growth and jobs. The drop in permits indicates that September’s gains are not sustainable. The report does not change the current direction of the housing market—a flat single-family market and a slowly improving multifamily market."
Claire Easley is a senior editor at Builder.