October surprise: Starts hit skids

One would have to look closely to find a bright spot from the residential construction report released by the Department of Commerce. Total housing starts fell to a seasonally adjusted rate of 519,000, down 11.7% from the downwardly revised September figure.

The results surprised the analysts. Briefing.com and other analysts were expecting starts to come in at a rate of about 600,000.

The 519,000-figure is the third lowest ever reported since the government began keeping track in 1959. The only two months to sink below the current level were April 2009, when starts were at 477,000; and January 2009, when starts were at 488,000.

Single-family starts, the bread and butter for the home channel LBM industry, came in at a rate of 436,000 -- down 1.1% from the downwardly revised September figure. Last year in October, single-family starts were at 475,000.

Aglimmer of better news appeared in the Commerce Department's tally of building permits. In October, building permits increased 0.5% to a rate of 550,000. But that's still 4.5% below the October 2009 estimate.

Single-family building permits increased 1.0% to 406,000.

On a regional basis, the Northeast showed by far the most positive metrics. The region posted a 25.5% increase in October single-family starts compared with October 2009, and a 43.6% increase in total housing starts, compared with the prior year.

The biggest regional decline metric occurred in the West, where total starts fell 30.5% in October compared with the previous month.