US housing starts unexpectedly drop in October

US housing starts unexpectedly fell in October, according to figures released on Wednesday by the Commerce Department.

Housing starts declined by 0.7% from September to 1.520m units, versus expectations for rebound to 1.579m. September’s figure was revised down from 1.555m to 1.530m. Meanwhile, single‐family housing starts fell 3.9% from September to 1.039m.

Still, permits for future housebuilding were up 4% to 1.650m units in October.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "Total starts fell because a rebound in multi-family activity - reversing the September dip - was not quite enough to offset a decline in the single-family sector, to a 14-month low.

"But the permits data are more useful because they lead, and are less volatile than starts. In October, most of the increase in permits was in the wild multi-family sector, up 6.6%, but single family permits rose too, up 2.7% to a five-month high.

"For most of this year permits and starts have run hotter than implied by the new home sales numbers, as homebuilders sought to add inventory, but they numbers have moved suddenly back into line, thanks to the jump in sales. We expect this to lead to another leg higher in construction activity over the next few months."