Housing Starts (which measure the start of construction on homes) unexpectedly rose in October for the second straight month, up 1.9% from September. While the largest share of the increase came in multi-family units, starts for single-family homes did inch higher by 0.2%. Building Permits, which are indicative of future supply, also rose in October after declining in September. Permits for single-family homes reached their highest level in a year. What’s the bottom line? Alicia Huey, NAHB Chair, noted that, “Despite higher interest rates in October, the lack of existing home inventory supported demand for new construction in the fall.” Yet, even with the uptick in Housing Starts, more supply is still needed to meet demand. In fact, when we look at the pace of completed homes that will be coming to market (around 1.41 million homes annualized) and subtract roughly 100,000 homes that need to be replaced every year due to aging, we’re well below demand as measured by household formations that are trending at 2 million. Even looking at future supply (Building Permits at 1.49 million annualized), we’re still much lower than where we need to be. The bottom line is that more demand than supply will continue to be supportive of home values, especially when we reach the spring homebuying season next year.