Housing Starts Fall in October as Permits Hit Six-Year High

Construction on new homes weakened in October, but a rise in permits issued for new projects points to stronger numbers ahead.

According to a report released by the Commerce Department, groundbreaking on new housing projects was at a seasonally adjusted annual rate of 1.01 million last month, a drop of 2.8 percent from September's upwardly revised estimate of 1.04 million.

The overall decline stemmed from a plunge in apartment starts, which were estimated at a rate of 300,000 compared to September's 335,000.

Building on homes for individual families, on the other hand, strengthened considerably, climbing an adjusted pace of 696,000—up from 668,000 in September and the highest rate of building since last November.

The jump in single-family starts occurred in the same month in which homebuilder confidence in that segment hit a stumbling block. The National Association of Home Builders' index of builder sentiment fell five points in October to 54, with all three components—current home sales, expected sales, and buyer traffic—losing ground from the prior month.

The group's latest index, released Tuesday, showed a rebound back to a level of 58.

"The rise in single-family starts is more proof that the economy is firming and consumer confidence is growing," said NAHB Chairman Kevin Kelly in a response to Wednesday's report. "We expect continued upward momentum into next year."

Meanwhile, permit issuance for new housing units was at a rate of 1.08 million, a six-year high for that figure. Permits for single-family homes were up to a rate of 640,000 from September's 631,000; last time permits passed the 640,000 mark was November 2013.