Rising Permits A Sign Of Things To Come

Building permits are an excellent indicator of how many new homes are going to be built in the coming months. Because of this, they are tracked each month by the U.S. Census Bureau and the Department Of Housing and Urban Development. In October, authorized permits to build new single-family homes rose 2.4 percent and, when including multi-family housing, permits were up 4.1 percent from September’s rate. This is good news, especially since housing starts – which refer to the number of new homes that broke ground during the month – fell 2.4 percent from the month before. In other words, though fewer new homes broke ground in October, there is an expectation that activity will soon pick back up. In fact, Michelle Girard, chief economist at RBS, told Reuters that housing’s fundamentals are solid. “Household formation is rising, demand for new homes is outstripping supply, and home builder confidence remains near its highest level in a decade,” Girard said. New home construction is important to the health of the overall housing market, as additional for-sale inventory can help balance the market and moderate home price increases. More here.

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