The value of new construction slid back in October after seeing a strong improvement in September, according to newly released figures for the month.
Dodge Data & Analytics reported a 4 percent drop in the value of new construction starts last month, estimating groundbreaking at a seasonally adjusted annual rate of $589.8 billion. The figure includes the value of new projects in the residential, commercial, and other segments.
The decline followed a 10 percent increase in September, which was the strongest month for total construction starts so far this year.
As of October, Dodge's index of new construction starts measured 125, down from a revised 129 in September and unchanged from the average for the previous quarter.
"Recent months have shown an up-and-down pattern for construction starts around what is still a rising trend," said Robert Murray, chief economist for Dodge Data & Analytics. "The continued growth for residential building in 2014 is being led by multifamily housing, featuring groundbreaking for numerous multifamily high-rises in major cities, while single-family housing remains stalled for now."
Dodge's numbers compare to the latest from the Census Bureau, which estimates total housing starts in October were at an adjusted annual rate of 1.01 million, down nearly 3 percent from September. The government's estimates on spending on new projects throughout the month are scheduled for release December 2.
The value of residential projects started last month picked up 11 percent from September, coming in at an annual rate of $245.9 billion, according to Dodge's report. All of that increase came from a boost in multifamily spending, which was up 40 percent following a 20 percent slide in September.
On the other hand, single-family housing was unchanged from its September pace, widening the gap between improvements in the multi- and single-family segments and drawing out the flat pattern that's been in place since the end of last year.
With sales of new homes struggling to see any meaningful lift, builders have slowed down on production for that market. As lending standards slowly loosen, market analysts hope to see a pickup in new building.
"Despite very low mortgage rates, with the 30-year fixed rate hovering around 4.0 percent, it still remains difficult for first-time homebuyers to get a mortgage," Murray said. "On a hopeful note, the latest survey of bank lending officers by the Federal Reserve did show some easing of mortgage lending standards during this year's third quarter, maintaining the trend towards slight easing that began in the spring."
For October, Dodge reported weaker single-family construction in the Northeast and South Central divisions, which reported drops of 5 percent and 2 percent, respectively. Meanwhile, gains were reported in the West (up 2 percent), and Midwest (up 3 percent).