Tuesday morning's report on Housing starts for the month of October was stronger than expected (894K vs. 840K) and came in at the highest level in more than four years. In spite of the strong report, one complaint regarding the report was that multi-family units made up an increasingly large share of total starts. In the October report, single family units dropped to 66.4% of total starts, bringing the 12-month average down to 69.2%. The small share of single family starts even prompted Goldman Sachs to lower GDP forecasts for the fourth quarter. While single family housing unit starts are more beneficial to the economy than multi-family units, the current breakdown between single and multi family unit starts is not way out of line with the historical range.
The chart below shows the historical 12-month average of the percentage of housing starts that have been single family units going back to 1960. As shown in the chart, the average level going back to 1960 has been 71.8%. Although the current level of 69.2% is only modestly below average, the share of single family units has widely fluctuated over time. Going back to just 1990, the current level is on the low side of the range. From 1960 to 1990, though, single family units as a share of total starts was typically much lower.
Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.