Economy Watch: Apartments Drive Homebuilding Surge in September
Home starts experienced an unexpected uptick in September, increasing 15 percent to an annualized rate of 658,000 units.
By Dees Stribling, Contributing Editor
Home starts experienced an unexpected uptick in September, according to the Census Bureau on Wednesday, increasing 15 percent to an annualized rate of 658,000 units. That’s about half of what’s generally considered healthy, but it’s still the highest rate since April 2010, when the industry was temporarily juiced by the homebuyers tax credit.
Much of the increase was due to the always-volatile multifamily homebuilding sector, whose starts ballooned 51.3 percent to an annualized rate of 233,000 units. It’s fairly clear now that the demand for apartments is trending upward, and the previously skittish finance community seems to have decided that lending for apartment development is generally a wise investment.
Single-family housing, on the other hand, saw a much more modest monthly increase of 1.7 percent, to an annualized rate of 425,000 units. The rate of building permits issued for all types of housing in September didn’t rise but in fact fell, indicating that the month’s spike might well be an anomaly driven by the spasmodic nature of apartment development, with starts dropping again in the near future.
Beige Book says economy still somnambulant
On Wednesday the Federal Reserve released the latest Beige Book, which is the nickname for the “Summary of Commentary on Current Economic Conditions by Federal Reserve District.” The book offered the observation that overall growth in the U.S. economy recently has been “modest” or “slight,” which are polite central-banker terms for “anemic,” or “sluggish,” or “sleepwalking.”
“The reports suggest that consumer spending was up slightly in most districts, with auto sales and tourism leading the way in several of them,” the Beige Book noted. “Business spending increased somewhat, particularly for construction and mining equipment and auto dealer inventories, but many districts noted restraint in hiring and capital spending plans.”
As for real estate, the Beige Book said that “All 12 districts reported that real estate and construction activity was little changed on balance from the prior report. Residential construction remained at low levels, particularly for single-family homes… Commercial real estate conditions remained weak overall, although commercial construction increased at a slow pace in most districts.”
CPI shows slight increase
The Bureau of Labor Statistics reported on Wednesday that the U.S. consumer price index rose 0.3 percent in September, which was the slowest rise since the beginning of summer. Not counting energy or food prices, which are notorious for being jumpy, the “core” CPI was up only 0.1 percent, the lowest rate since March.
Over the last 12 months, the all-items index increased 3.9 percent (which accounts for the cost-of-living increase in Social Security payments announced this week, the first since 2008). The 12-month change for all items besides food and energy remained at 2 percent for the second straight month. Compared with a year ago, energy prices—mostly gasoline—were up 19.3 percent.
Wall Street was puttering along in positive territory much of the trading day on Wednesday, but took a dive at the end. The Dow Jones Industrial Average lost 72.43 points, or 0.63 percent, while the S&P 500 and the Nasdaq were down 1.26 percent and 2.01 percent, respectively.