US home building falls 0.3% in Oct; single-family sector gains

17 November 2011 14:36  [Source: ICIS news]

WASHINGTON (ICIS)--US new home building fell by 0.3% in October from September, the Commerce Department said on Thursday, but construction in the key single-family housing sector saw a strong 3.9% advance.

The department said that overall housing starts last month were at a seasonally adjusted annual pace of 628,000, slightly below the downwardly revised September figure of 630,000 (originally reported at 658,000).

But most of the October decline was attributed to a 13.3% drop in construction of multi-family apartment buildings.

In the single-family new home construction sector – considered the core of the US housing industry – there was a 3.9% gain in October, to 430,000 units.

Housing construction is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres, among many others.

The American Chemistry Council (ACC) estimates that each new home built represents some $15,000 (€11,100)-worth of chemicals and derivatives used in the structure or in production of component materials.

In its monthly report, the department also said the number of building permits rose by a substantial 10.9% in October from September to a seasonally adjusted annual rate of 653,000, compared with the previous month's figure of 589,000.

This gain suggests that new residential construction is likely to show some gains when the November data are available next month.

Building permits are issued by local governments when contractors are ready to break ground and begin construction of a residential structure, so monthly permit data are seen as a real-time indicator of the housing sector’s near-term prospects.

Although October saw an advance in housing starts on single-family homes to some 430,000 units, that pace had previously been reached in July this year and was higher, at 434,000 units, in October 2010.

This suggests that in the core single-family home construction sector, the industry continues to bounce along the bottom.

Overall new housing construction in October was 16.5% ahead of the same month last year, but that was attributed to a nearly 97% increase in apartment-building development over the last 12 months.

Advances in multi-family apartment construction are seen by economists as a symptom of the ongoing housing slump, because as current home-owners lose their residences to foreclosure, they typically move into rental units, driving increased demand for apartment buildings.

The October housing data comes in the wake of other reports showing that bank foreclosures are again on the rise after a year-long hiatus.

US Housing Starts


Oct ’11

Sep ’11

Sep-Oct ’11

Oct ’10

Oct ’10 to Oct ’11

US Housing Starts






* Seasonally adjusted & annualised

($1 = €0.74)

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