New housing construction picked up the pace in September, rebounding after a significant stumble in August.
According to a joint release from the Commerce Department and HUD, homebuilders broke ground on new projects at a seasonally adjusted annual rate of 1.02 million last month, 6.3 percent above August's revised estimate of 957,000 (just barely up from the government's initial estimate).
Annually, September starts were up 17.8 percent.
As the housing market continues to move in fits and starts this year, construction has remained one of the more volatile measures, seesawing from month to month as job concerns and stagnant income stifle household formation.
On top of that, most major improvements have favored the multifamily market, which contributes less to the nation's economic growth than the single-family market. That trend continued in September, with single-family starts ticking up only 1.1 percent (to an annual rate of 646,000) compared to an 18.5 percent gain in buildings with five units or more.
Despite the lackluster trend in single-family starts and the volatility in measures of new home sales, builder confidence in that market still remains on the high side. Even after falling five points in October, the National Association of Home Builders' (NAHB) confidence index remains four points above the benchmark considered to be a neutral outlook.
While admitting the index "may be overdoing the short term outlook for housing starts," Paul Diggle, property economist at Capital Economics, agrees with NAHB that the future looks brighter.
"After all, the land and labour shortages faced by homebuilders are easing, the economy is generating well over 200,000 additional jobs per month, and homebuilding is running below the level required by underlying population growth," Diggle said in a note.
Overall, starts rose in all four census regions, climbing 5.3 percent in the Northeast, 3.5 percent in the Midwest, 4.2 percent in the South, and 13.9 percent in the West.
Looking at only single-family units, starts slipped slightly in the Northeast and South, falling 1.8 percent and 5.1 percent from August, respectively. Building in the West edged up 2.9 percent, while the Midwest saw a 23.2 percent surge in single-family projects started.
Meanwhile, permits for future homebuilding projects edged up 1.5 percent to a seasonally adjusted yearly rate of 1.02 million. All of that increase came from the multifamily side (five or more units), which grew 7 percent over the month. Single-family permits were down 0.5 percent to a rate of 624,000.