Starts For New Homes In October Were Much Lower Than Expected

Seasonally adjusted housing starts in October 2010 were well below economists’ targets for the month, and represented a significant drop from September 2010. On the positive side, building …

Seasonally adjusted housing starts in October 2010 were well below economists’ targets for the month, and represented a significant drop from September 2010. On the positive side, building permit applications increased slightly, providing hope that growth in housing starts could be around the corner. See the following article from The Street for more on this.

Homebuilders began construction on 11.7% fewer homes in October, far worse than the expected contraction rate, though applications for building permits edged up 0.5%, pointing to an uptick in future homebuilding activity.

The Commerce Department said early Wednesday that housing starts came in at a seasonally adjusted annual rate of 519,000 in October, after a downwardly revised rate of 588,000 for September and worse than the rate of 600,000 economics expected, according to consensus estimates listed on Briefing.com.

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The figure compares with the originally reported pace of 610,000 reported for September.

Applications for building permits increased 0.5% to a seasonally adjusted annual rate of 555,000, compared with the revised September rate of 547,000. October’s rate remains 4.5% lower than in the year-earlier month.

Building permits are viewed as an indication of future home construction.

Stocks in the homebuilder sector were mixed in premarket trading Thursday ahead of the report on housing starts and building permits. The SPDR S&P Homebuilders(XHB), an exchange-traded fund that tracks the sector, was 0.5% lower, while the iShares Dow Jones US Home Construction(ITB) ETF was flat.

Among individual builders, D.R. Horton(DHI) fell 0.5%, Lennar(LEN) 0.5%, Toll Brothers(TOL) 0.5%. KB Home(KBH) and NVR(NVR) were flat. PulteGroup(PHM) bucked the trend, gaining 1.9% in premarket trading.

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