As with the NAHB (National Association of Home Builders) index, the regional mix was mixed.
- The Northeast sagged 5.1%, down two straight months.
- The Midwest surged 6.7% after a 20.7% run-up.
- The South saw a 20% jump, after +8.1% the month before.
- The West rebounded 20% after a -7.7% August reading.
What stood out was the 25% run-up in starts for multi-family dwellings after two months of declines. This sector has a lower multiplier impact on the broad economy than single-family construction, which lagged but still posted a healthy 11% sequential advance to a 603k annual rate.
But here is the rub. New home sales are running at a 373k unit annual rate. So the 603K in single-family starts and the 524k in completions have begun to stretch the bounds a bit. Absent a further rise in demand, which was not altogether that apparent in the latest buying plans survey or the just released NAHB index for that matter, we may well be sitting on these starts levels for some time.
Rarely have we seen a sector that represents the grand total of 2% of GDP and 0.1% of the stock market cap garner so much attention and enthusiasm. That we just came off the first contraction in manufacturing production since 2009 for a segment that accounts for 10% of the economy and 10% of the equity market has been swept aside.
Yes, yes, housing and autos have both enjoyed good years, but don't confuse a
cyclical upturn with a level shift...
Single-family starts now exceed sales by more than 60% and only 30% of the sales are by first-time buyers. That does not tell me housing is in some durable uptrend. and the reality is that after overcutting the builders have now caught up with demand...Indeed. you know that the housing rebound is on a short leash when people aren't shopping for furniture or home appliances any longer —just have a look at Appliances Hit Slow Cycle on page B5 Of today's WSJ.
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