U.S. Housing Starts Fall in September Amid Hurricane Florence
Due to the hurricane, starts drop 13.7% in the South region, which accounts for about half of starts.
Highlights of Housing Starts (September) Residential starts dropped 5.3% to 1.201m annualized rate (est. 1.21m) after downwardly revised 1.268m pace in prior month Multifamily home starts fell 15.2%; single-family declined 0.9% Permits, a proxy for future construction of all types of homes, slipped 0.6% to 1.241m rate (est. 1.275m) after 1.249m pace; reflects decline in multifamily permits.
Analysts had forecast a decline in housing starts after Hurricane Florence, which made landfall in North Carolina on Sept. 14, caused damage and flooding throughout the Carolinas. Those states are part of the report’s South region, which accounts for about half of starts and showed a 13.7% drop from the prior month. Hurricane Michael, which struck Florida and other southeastern states last week, will probably affect activity in October.
While the impact of the storms on housing data is likely to be temporary, the decline in starts largely reflected slower construction in multifamily housing, a category that tends to be volatile. In addition, permits for single-family homes rose 2.9% last month, the most in a year, on gains in the Northeast and West, indicating builders have a steady pipeline of construction.
That indicates housing could contribute to the economy toward the end of the year as consumer demand, helped by a solid job market, lower taxes and post-storm rebuilding, overshadows headwinds including rising mortgage rates and property prices.
A decline in lumber prices from a record earlier this year may also be providing some comfort to developers. A gauge of homebuilders’ confidence rose in October for the first time in five months, according to a National Association of Home Builders/Wells Fargo report released Tuesday.
Other Details Single-family home starts fell to a 871,000 rate from 879,000 the prior month. Groundbreaking on multifamily homes, such as apartment buildings and condominiums, dropped to an annual rate of 330,000. Midwest region also posted a decline in starts, while they rose in Northeast and West to highest levels since March. The report shows wide margin of error, with a 90% chance that the September figure on housing starts ranged from a 16.6% drop to a 6% gain. The report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington.