U.S. Housing Starts Fell in September Amid Hurricane Florence

October 17, 2018 Share Print 0

U.S. new-home construction fell in September on a decline in the South that may reflect disruptions from Hurricane Florence, government figures showed Wednesday.

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

Key Takeaways

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 percent 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 percent 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

Report shows wide margin of error, with a 90 percent chance that the September figure on housing starts ranged from a 16.6 percent drop to a 6 percent gain

Report released jointly by the Census Bureau and Department of Housing and Urban Development in Washington

Bloomberg Quint

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Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.