Housing Construction Activity Drops in September as Both Starts and Permits Fall

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in September FELL 4.5 percent to a seasonally adjusted annual rate (SAAR) of 1.21 million units;
  • The rate of permits for single-family home starts in September ROSE 2.4 percent to an SAAR of 819,000 units;
  • The rate of permits for multi-family homes DECLINED 16.1 percent in September to 396,000 units (SAAR), the weakest pace since last September;
  • The rate of housing starts FELL 4.7 percent in September to an SAAR of 1.13 million, the weakest pace in a year; single-family starts DECLINED 4.6 percent to an SAAR of 829,000 while multi-family starts FELL 5.1 percent to an SAAR of 298,000 million, the slowest pace since in a year;
  • The rate of home completions in September ROSE 1.1 percent from August with completions for single-family homes increasing while multi-family completions declined.

Image result for housing starts

With the South leading the slide, single-family home starts fell in September in the aftermath of hurricanes Harvey and Irma, the Census Bureau and Department of Housing and Urban Development reported Wednesday. http://www.census.gov/construction/nrc/pdf/newresconst_201709.pdf

Change since August 2017

Permits Starts Completions
Total      ↓
Single-Family      ↑
Multi-Family      ↓

The South accounted for more than the national decline in the rate of single-family starts, with the region’s SAAR dropping 73,000 compared with a national decline of 40,000.

And the dip in starts could get even worse as rebuilding kicks in in the South, diverting labor and resources.

The Bureau of Labor Statistics earlier this month reported the number of residential construction jobs, including specialty trade contractors, decreased 4,00 in September to. 2,693,000 – after a drop of 5,000 two months earlier.

While permits for new single-family homes rose to their highest level since May, permits for multi-family homes declined with their steepest percentage month-month drop since May. That said, single -family permits are experiencing something of a rebound. In the last 12 months, single-family permits represented an average of 64.7 percent of all permits, up from 61.6 percent in the preceding 12 months.

Home buyers had been shunning single-family homes in favor of multi-family (which could include condos and coops) to be closer to downtown areas which are experiencing a comeback of their own. But the increasing popularity of new single-family homes could mean further troubles for beleaguered existing home sales market struggling with a lack of inventory.

The improvement in single-family completions – up 4.6 percent in September to 781,000 – could add to builder inventory concerns. The unsold inventory of new homes climbed to 284,000 in August – its highest level since May 2009.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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