PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Strong Housing Starts Continue in October

By at 18 November, 2020, 4:35 pm

by Raymond J. Keating-

Housing continues as a bright spot for the economy and small business, according to the latest report from the U.S. Census Bureau.

Housing starts (at a seasonally-adjusted annualized rate) were up by 4.9 percent in October 2020 over September. Starts also were by 14.2 percent compared to a year earlier.

Single-family housing starts once again shined, up by 6.4 percent in October compared to the previous month. Compared to a year earlier, single-family housing starts were up by 29.4 percent. See the trends over the past year in housing starts overall and single-unit starts in the following two charts.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

Housing starts have bounced back strongly after big dives when the pandemic initially struck in the U.S. Starts overall, again, are up versus a year earlier, and almost back to where they were just before the pandemic hit. However, single-family starts have surpassed their pre-pandemic levels.

Meanwhile, housing permits – an indicator of future starts – were effectively unchanged in October versus September, after a five-month run up. As for single-family unit, building permits also were flat after months of increases. Compared to a year earlier, housing permits in October increased by 2.8 percent, but single-unit permits increased by 20.8 percent. And as noted in the following two charts, building permits overall and for single-unit housing have both exceeded their pre-pandemic levels.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

The COVID-19 impact on individuals and families making moves from urban to suburban and ex-urban areas is clear in recent months. For good measure, with housing construction overwhelmingly about smaller businesses (for example, with 99.7 percent of employer firms in the residential construction sector having fewer than 100 employees), this is one sector where small businesses are experiencing real opportunity and growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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