Housing Starts Loses 2 Unit Push


Today the Census Bureau reported that housing starts for September fell to  9% below starts in August and to nearly 12% below starts from September of 2015  : http://go.usa.gov/3uKjC

“Privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,047,000. This is 9.0 percent (±9.2%)* below the revised August estimate of 1,150,000 and is 11.9 percent (±11.9%) below the September 2015 rate of 1,189,000”

“Single-family housing starts in September were at a rate of 783,000; this is 8.1 percent (±7.4%) above the revised August figure of 724,000. The September rate for units in buildings with five units or more was 250,000”

“Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,225,000. This is 6.3 percent (±1.9%) above the revised August rate of 1,152,000 and is 8.5 percent (±2.4%) above the September 2015 estimate of 1,129,000.

 “Single-family authorizations in September were at a rate of 739,000; this is 0.4 percent (±1.6%)* above the revised August figure of 736,000. Authorizations of units in buildings with five units or more were at a rate of 449,000 in September” 

Total starts haven’t been able to break over 1,200,000 this year.  The main culprit in the slowdown is the low number of starts for multifamily units compared to last year. Two-unit structure starts in particular have fallen off a cliff. However, this recent big pull back should be taken with a grain of salt as permits for multifamily grew in this report.

From Calculated Risk:


Looking at the 6-month  moving average on total starts shows the slow down as well.

From Doug Short



From Doug Short



We shouldn’t expect housing to outperform in this cycle, even with the expansion being in year 8 and the longest job creation streak of 72 months, ever in U.S. history.  Coming from an over investment thesis from the housing bubble into a light demographic patch means that housing will under perform until demographics get better.

As long as there is single family residence growth, the cycle still has legs. However, saying that we will easily get to 1.5 million starts this year (the 50 year average) , as some have said, was clearly overly optimistic .  Demographics are not favorable enough at this time for that to happen.


New home sales are the highest this year, in this cycle, with the revision sales data looking good for first time in a long time. However, in context, sales are still very low historically, especially for a 8th year cycle print with mortgage rates under 5% since early 2011.

Slow and steady as she goes until the next decade is the way to look at housing. As long as single family construction can still grow, no major red flag yet from this data line.

Single-family starts are up 8.6% year to data while multi-family starts are down 5.6% year to date.


I will be speaking at  2016 Americatalyst: Fast Forward,October 30 – November 1st  in Austin, Texas. 


Logan Mohtashami is a senior loan officer at AMC Lending Group,  which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data  daily on his own facebook page https://www.facebook.com/Logan.Mohtashami