US new-home construction fell in September on a decline in the South that may reflect disruptions from Hurricane Florence, government figures showed onWednesday.
Highlights of Housing Starts (September)
- Residential starts dropped 5.3% to 1.201m annualised 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 September 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.
On the other hand, permits for multifamily housing fell to the lowest level since March 2016, suggesting that an apartment glut in some cities may be making builders more hesitant.
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 on Tuesday.