Housing market still the shining star of the economy, analysts say
Continued gains in housing starts and building permits reiterated the strength of the housing market, one of the sectors that has done well despite the COVID-19 pandemic.
Housing starts climbed 1.9% to a seasonally adjusted 1.415 million annual rate in September, from a revised August pace of 1.388 million, first reported as 1.416 million, while building permits surged 5.2% in the month to a seasonally adjusted 1.553 million annual rate from August’s unrevised 1.476 million pace, according to the Commerce Department.
Economists expected 1.450 million starts and 1.505 million permits in the month.
Year-over-year starts are up 11.1% from the 1.274 million pace in September 2019. Year-over-year, permits are 8.1% higher than the 1.437 million in the same time frame last year.
"The housing market remains a bright spot in the U.S. economy, and this is reflected in today's positive housing starts report," Chairman of the National Association of Home Builders Chuck Fowke said. "Builder confidence is at an all-time high as buyer traffic is strong-another sign that housing is helping to lift the economy."
Housing completions in September jumped 15.3% to an annual rate of 1.413 million, above August's of 1.226 million. Year-over-year, completions swelled 25.8% from the September 2019 pace of 1.123 million.
“The housing market remains the best part of the U.S. economy, as U.S. housing starts delivered a slight gain in September while missing the consensus estimate due to the very volatile multi-family component,” according to Ed Moya, senior market analyst at OANDA. “A strong increase in single-family houses and rising building permits shows the momentum in the housing sector is not going away anytime soon.”
Philadelphia Fed non-manufacturing survey
The Philadelphia region's services sector “continued to expand” in October, as the regional general business conditions index grew to 16.0 from 8.0 a month ago, while at the firm level, the index climbed to 25.3 in October from 20.4 the prior month, according to the Federal Reserve Bank of Philadelphia.
The prices paid index was 17.9, up from 17.1 last month, while prices received slipped to 5.2 from 15.5.
New orders index dipped to 4.8 from 8.5, sales or revenues increased to 14.2 from 9.8, the unfilled orders index gained to 4.0 from 1.0, the inventories index dropped to negative 3.2 from positive 0.4, the number of full time employees index gained to 15.7 from 5.1, and the average employee workweek rose to 20.9 from 9.7.
Wages and benefit costs decreased to 10.4 from 13.1.
Capital expenditures for physical plant dropped to negative 1.3 from positive 2.9, while capital expenditures for equipment and software gained to 12.2 from 11.7.
The six months from now regional general business conditions index dipped to 33.6 from 33.7, while at the company level, the general business conditions index fell to 47.3 from 52.1.
"The Philly Fed non-manufacturing survey told a very familiar story, business activity is expanding but the outlook is weakening," said Moya. "The Outlook survey remains positive, but the pace of the recovery is still nowhere near pre-pandemic levels."
Both the Philly Fed non-manufacturing survey and housing data "highlight where the U.S. economy is in this recovery," he said, "and that means more fiscal support will be needed once financial markets are beyond the presidential election."