US housing starts: Lower-than-expected in September

By Paul Quinn, RBC Equity Analyst
RBC Capital Markets
October 19, 2021
Category: Finance & Economics
Region: Canada, United States





Negative: September housing data was worse than expected – The US Census Bureau released new residential construction statistics for September. Housing starts were below expectations at 1,555k SAAR vs. consensus at 1,620k SAAR, while housing permits were below expectations at 1,589k SAAR (vs. consensus at 1,700k). Single-family starts of 1,080k were flat m/m while multi-family starts of 467k were down 5.1% m/m. Homebuilder confidence increased +4 points m/m to 80 due to improved single-family home sales and increased traffic of prospective buyers.

September US housing starts of 1,555k (SAAR) were below consensus at 1,620k SAAR – Total starts were up 7.4% y/y and down 1.6% m/m from the revised August figure of 1,580k (revised lower from 1,615k SAAR). On a regional basis, the South represented 54% of total starts vs. 25% in the West, 14% in the Midwest and 8% in the Northeast. On a y/y basis, starts in the South were up 9.4% y/y, while the West was up 9.7% y/y. The Midwest was up 3.3% y/y, while the Northeast was down 4.8% y/y. For September, single-family starts represented 69.5% of total starts (vs. 71.8% in 2020 and 68.8% in 2019). The lower proportion of single-family new residential construction is significant since single-family housing starts typically consume 3x the amount of wood products vs. multi-family starts.

US housing permits of 1,589k (SAAR) were below consensus at 1,700k SAAR – Total permits were unchanged y/y and down 7.7% m/m against the August figure of 1,721k (revised lower from 1,728k SAAR). Single-family permits of 1,041k were down 7.1% y/y and down 0.9% m/m, while multi-family permits of 548k were up 17.1% y/y and down 18.3% m/m. Single-family permits represented 65.5% of September permits.

US Building Materials, Garden Equipment, and Supplies Dealers Advance Retail Sales increased +5.8% y/y in September – According to the US Census Bureau, category retail sales were up 0.1% m/m to $39.1 billion. Relative to 2019, sector sales were up 29.6% as sales remain well above pre-pandemic levels.

Canadian housing starts trended downwards in September – According to the CMHC, Canadian seasonally adjusted housing starts were down 4.4% m/m in September to 251.2, significantly higher than a year ago when housing starts were 209.0. The September figure was 3.5% below consensus estimates as starts were lower m/m in 5 of 10 provinces. 

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