Privately-owned housing starts in September grew at a seasonally adjusted annual rate of 1.201 million units, according to new data from the U.S. Census Bureau. That was a 5.3 percent decrease from August’s downward-revised print and worse than expected. Most of the weakness was due to multi-family units (rentals), which fell by 12.9 percent in September, while single-family starts slid by only 0.9 percent. Regionally, starts rose in the Northeast (29.0 percent) and the West (6.6 percent) last month and fell in the Midwest (-14.0 percent) and the South (-13.7 percent). Hurricane Florence likely exacerbated the decline in the South in September, and hurricane Michael might have had a similar impact this month.
As for building permits, this metric of future construction activity also softened in September, but again the weakness was concentrated in the multi-family segment (-9.3 percent), while single-family permits actually rose by 2.9 percent. Looking ahead, homebuilder optimism improved in October to the best level since July, according to new NAHB data, and the gauge of prospective buyer traffic climbed to a 7-month high. NAHB chairman Randy Noel added that builders are “relieved that lumber prices have declined for three straight months from elevated levels earlier this summer, but they need to manage supply-side costs to keep home prices affordable.” Moreover, rising mortgage rates are offsetting the declines in building costs, and NAHB chief economist Robert Dietz cautioned that “unless housing affordability stabilizes, the market risks losing additional momentum as we head into 2019.”
Sources: Econoday, U.S. Census, NAHB, ZH, Twitter, FRBSL
Post author: Charles Couch