Highlights
Housing activity unexpectedly fell back in October, calling into question the strength of housing recovery. Housing starts in October dropped 10.6 percent, following a revised 1.9 percent gain the month before. October's 0.529 million unit pace of new home groundbreaking came in much lower than the consensus forecast for 0.600 million unit and was down 30.7 percent on a year-ago basis. The decline was led by a 34.6 percent plunge in multifamily starts but the single-family component also slipped-by 6.8 percent.

By region, the October drop in starts was led by an 18.8 percent fall in the Northeast. Other Census regions also declined: the Midwest, down 10.6 percent; the South, down 9.6; and the West, down 8.5 percent.

Homebuilders appear to be cautious about upcoming new home sales as housing permits in October dropped 4.0 percent after dipping 0.9 percent the month before. October's pace of 0.552 million units annualized was down 24.3 percent on a year-ago basis.

October's starts numbers were disappointing and likely reflect concern by homebuilders about the housing market once the first-time homebuyer tax credit was expected to expire at the end of November. That credit has been extended and expanded and we may see some pickup in coming months in the single-family component. Weakness in the multifamily component will still be affected by high vacancy rates but this component is volatile.

On the release, equity futures slipped as Treasury yields mostly firmed (but as a result of higher CPI inflation announced at the same time).

Market Consensus Before Announcement
Housing starts in September rose 0.5 percent, following a revised 1.0 percent decline in August. But the September pace of 0.590 million units was below initial August estimate of 0.598 million units. The September pace of overall starts was down 28.2 percent year-on-year. Housing permits point toward a pause or temporary leveling in the housing recovery, slipping 1.2 percent, following a 2.8 percent rise in August. Permits in the latest month stood at an annualized 0.573 million units and were down 28.9 percent on a year-ago basis.

2009 Release Schedule

Released On: 1/22 2/18 3/17 4/16 5/19 6/16 7/17 8/18 9/17 10/20 11/18 12/16 Released For: Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov