Single-family housing starts rose 3.9 percent to a seasonally adjusted annual rate of 430,000 units in October, according to newly released data from the U.S. Commerce Department. This improvement was somewhat masked by an 8.3 percent decline in multifamily starts that kept the combined number for nationwide housing production virtually flat at 628,000 units in October. Meanwhile, single-family permits also posted a measurable gain of 5.1 percent to 434,000 units in the latest report, which is their fastest pace since December of 2010.
"The government's numbers for October housing production are very much in keeping with what home builders have been telling us in our recent surveys," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "While we still have a long way to go toward a recovery, some signs of hope are emerging in certain markets where economic and job growth is occurring and where foreclosures have not been an overwhelming obstacle."
"The three-month moving averages for both housing production and permitting activity have been gradually rising since this spring, which is consistent with our forecast for slow improvement in market conditions through the end of this year and a positive sign that a more solid recovery will begin to take hold in 2012," said NAHB Chief Economist David Crowe. "That said, the improvements we are seeing are still limited to scattered local markets where economies are improving, and obstacles such as tight credit conditions for builders and buyers, appraisal issues stemming from new homes being compared to distressed properties, and consumer concerns about job security are definitely slowing the progression of both a housing and economic recovery."
While combined housing starts in October declined by a barely perceptible 0.3 percent to a rate of 628,000 units, the single-family sector posted a 3.9 percent gain to 430,000 units. Meanwhile, the more volatile multifamily sector posted an 8.3 percent decline to 198,000 units following an unsustainably large gain in the previous month.
Combined starts activity was up in three out of four regions in October. Gains of 17.2 percent, 9.7 percent and 1.6 percent were registered in the Northeast, Midwest and South, respectively, while the West posted a 16.5 percent decline.
Permit issuance, which can be an indicator of future building activity, rose 10.9 percent to a seasonally adjusted annual rate of 653,000 units in October on gains in both the single- and multifamily sides. Single-family housing permits rose 5.1 percent to 434,000 units - their highest level since December of 2010 - while multifamily permits rose 24.4 percent to 219,000 units - their highest level since October of 2008.
On a regional basis, combined permitting activity was down 1.6 percent in the Northeast and 3.7 percent in the Midwest, but up 21.5 percent in the South and 5.4 percent in the West.
Buoyed by stabilizing home prices and sustained low interest rates, nationwide housing affordability during the third quarter of 2011 hovered near its highest level in the more than 20 years it has been measured, according to National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) data.
The HOI indicated that a near-record 72.9 percent of all new and existing homes sold in the third quarter of the year were affordable to families earning the national median income of $64,200. The affordability measure rose slightly from the 72.6 percent set last quarter and has remained above the 70 percent threshold for 11 consecutive quarters. The HOI rarely rose above 60 percent prior to this period.
"With interest rates at historically low levels and markets across the country beginning to improve, homeownership is within reach of more households than it has been for nearly two decades," Nielsen noted. "However, tough economic conditions -- particularly in markets that experienced major changes in house prices and production -- as well as extremely tight credit conditions confronting home buyers and builders continue to remain significant obstacles to many potential home sales."
Lakeland-Winter Haven, Fla., was the most affordable major housing market in the country during the third quarter of the year. In Lakeland, 92.5 percent of all homes sold were affordable to households earning the area's median family income of $53,800.
Other major metro housing markets ranking near the top of the index were Toledo, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; and Ogden-Clearfield, Utah, respectively.
Among smaller housing markets, the most affordable was Fairbanks, Alaska, where 97.8 percent of homes sold during the third quarter of 2011 were affordable to families earning a median income of $91,700. Also ranking near the top were Kokomo, Ind.; Cumberland, Md.-W.Va.; Davenport-Moline-Rock Island, Iowa-Ill.; and Lima, Ohio.
New York-White Plains-Wayne, N.Y.-N.J., led the nation as the least affordable major housing market during the third quarter of 2011. In New York, 23.3 percent of all homes sold during the quarter were affordable to those earning the area's median income of $67,400. The New York metropolitan division has held the least affordable market position for the last 14 quarters.
Other major metro areas near the bottom of the affordability index included San Francisco-San Mateo-Redwood City, Calif.; Honolulu; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif., respectively.
Ocean City, N.J., where 41.7 percent of the homes were affordable to families earning the median income of $70,100, was the least affordable of the smaller metro housing markets in the country during the third quarter. Other small metro areas ranking near the bottom included Santa Cruz-Watsonville, Calif.; San Luis Obispo-Paso Robles, Calif.; Santa Barbara-Santa Maria-Goleta, Calif.; and Brownsville-Harlingen, Texas.
Visitwww.nahb.org/hoifor tables, historic data and details.