New residential construction in the U.S. increased by more than anticipated in the month of September, according to a report released by the Commerce Department on Friday, although the rebound did not completely offset the sharp drop seen in the previous month.
The Commerce Department said housing starts climbed 6.3 percent to a seasonally adjusted annual rate of 1.017 million in September after tumbling 12.8 percent to a rate of 957,000 in August. Economists had expected housing starts to rise to a rate of 1.008 million.
While housing starts rebounded by more than expected, the annual rate remained well below the eight-month high of 1.098 million seen in July.
The increase in housing starts largely reflected a rebound in multi-family starts, which jumped 16.7 percent to annual rate of 371,000 in September after plunging 28.7 percent to a rate of 318,000 in August.
Single-family starts showed a more modest increase, climbing to a rate of 646,000 in September from a rate of 639,000 in August.
Peter Boockvar, managing director at the Lindsey Group, noted that the annual rate of single-family starts is little changed from the twelve-month average of 634,000.
“It also compares with the peak of 1.82 million in January ’06, the 1991 recession trough of 604,000 and the 1981 recession bottom of 523,000,” Boockvar said. “This squares with the continued lackluster weekly reads in applications for a mortgage to buy a home.”
The report also showed that building permits, an indicator of future housing demand, rose 1.5 percent to a rate of 1.018 million in September after falling 5.1 percent to a rate of 1.003 million in August.
Multi-family permits jumped 4.8 percent to an annual rate of 394,000, while single-family permits edged down 0.5 percent to a rate of 624,000.
The Commerce Department noted that the annual rate of housing starts in September is up by 17.8 percent compared to the same month a year ago. Building permits were up by 2.5 percent year-over-year.
On Thursday, the National Association of Home Builders released a separate report showing an unexpected deterioration in homebuilder confidence in the month of October.
The report said the NAHB/Wells Fargo Housing Market Index dropped to 54 in October after jumping to a nearly nine-year high of 59 in September.
The pullback surprised economists, who had expected the index to come in unchanged compared to the previous month.
“After the HMI posted a nine-year high in September, it’s not surprising to see the number drop in October,” said NAHB Chief Economist David Crowe.
He added, “However, historically low mortgage interest rates, steady job gains, and significant pent up demand all point to continued growth of the housing market.”
by RTT Staff Writer
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U.S. Housing Starts Rebound To 1.017 Million Annual Rate In September
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