Even though home builder sentiment has started rising, builders pulled back on new construction last month, with Housing Starts falling 3.1% from September. Starts for single-family homes, which make up the bulk of homebuilding and are the most crucial due to buyer demand, were down nearly 7%. Building Permits, which reflect future construction, moved lower overall though Single-family Permits inched 0.5% higher.
What’s the bottom line? While higher mortgage rates slowed production in October, the impact of the hurricanes in the South also added to the weakness seen in construction activity last month. In broader terms, new home building is still not keeping up with demand as Housing Starts are near six-year lows. The limited new supply on the market relative to household growth should continue to support home prices.