Single-family construction starts rallied in October, increasing nearly 11% to an annual rate of 869,000. Meanwhile, multifamily construction in October was also unusually strong. A gradually strengthening economy has led to a broadening of the types of residences being built, as depicted in the third-quarter data for the individual home building sectors:
Custom home building posted 49,000 starts—its best quarter since the recession.
Townhouse construction achieved a 12.4% share of the single-family market—near a cycle high.
Median single-family home size is trending down as more entry-level homes are constructed.
Rental housing continues to dominate, accounting for 92% of all new multifamily construction.
Overall growth helped support yet another strong level of builder confidence, according to this month's NAHB/Wells Fargo Housing Market Index. However, the surge from October is likely temporary. Single-family starts are expected to return to trend in the coming months, as will apartment construction while that market seeks a balance between supply and demand.
–NAHB Chief Economist Robert Dietz