Housing Starts: Slide Resumed In Late 3Q

Bottom Line:  Housing starts fell more than expected in September, resuming the downtrend after a modest rebound in August. Single-family starts fell below 900k annualized units for the first time since the pandemic, hitting levels seen when activity slowed in 2017 following tax changes. Single-family permits authorized but not yet started remained very high but were showing signs of topping, much as they did in late 2006 before falling sharply during the financial crisis. Multi-family starts, especially larger 5+ unit projects, remain robust, near historic highs as housing broadly remains in short supply, even as affordability hampers single-family demand. Finally, two other data points are detailed below and show continued weakness in housing -- mortgage applications continued to slide; the homebuilder's survey released yesterday showed another sharp drop in buyer traffic. Overall, single-family construction activity turned from a tailwind to a sharp headwind for economic growth in the 2nd Half of 2022. While strength in multi-family provided a modest offset to some of the initial weakness, all signs suggest housing will be a considerable drag on growth late in the 3rd Quarter and into the 4th Quarter.

Total US Annualized Housing Starts FELL 127k to 1.44M, BELOW the 3-Month average of 1.46M, BELOW the 6-Month average of 1.55M and 120k BELOW the year-ago level.Single-Family Starts FELL 44k to 892k, BELOW the 3-Month average of 909.33k, BELOW the 6-Month average of 997.83k and 202k BELOW the year-ago level.  Multi-Family Starts FELL 80k to 530k, BELOW the 3-Month average of 534k, BELOW the 6-Month average of 539k but 75k ABOVE the year-ago level.
 
Total Building Permits ROSE 22k to 1.56M, BELOW the 3-Month average of 1.6M, BELOW the 6-Month average of 1.67M and 51k BELOW the year-ago level.