Housing Starts Down in August Following Three Monthly Gains

Single-family housing starts in the South declined by just over 13 percent month-over-month in August.

Nationwide housing starts fell 5.8% to a seasonally adjusted annual rate of 1.14 million units in August, according to newly released data from the U.S. Housing and Urban Development and the Commerce Department.

Economists had expected housing starts to drop by 1.7 percent to a rate of 1.190 million from the 1.211 million that had been reported for the previous month. Authorized permits fell 0.4 per cent in August to an annual rate of 1.14 million – a level slightly lower than pace of new construction. However, permits for single-family homes, which represents the largest segment of the market, increased 3.7% to a 737,000-unit pace.

The total number of building permits issued recorded a 2.3 percent decline to 1,139,000 units seasonally adjusted from August 2015.

It joined a stream of recent soft economic data such as retail sales, nonfarm payrolls and industrial production, which, together with low inflation are expected to encourage the USA central bank to leave interest rates unchanged on Wednesday.

Housing starts came off last month’s positive news, posting a considerable slowdown in home building.

Meanwhile, Capital Economics stated, “As expected, housing starts fell back in August”.

On Monday, an industry group reported that builder sentiment (http://www.marketwatch.com/story/home-builder-confidence-roars-to-a-cycle-high-in-september-nahb-says-2016-09-19) soared to match its best reading of the past decade in September, so activity may rebound in the coming months. The rate rose 3.8% year over year.

Housing market strength helped Lennar Corp, the second-largest USA homebuilder, report higher-than-expected profit and revenue for the third quarter.

Single-family starts plunged by 6.0 percent to a ten-month low of 722,000, while multi-family starts slumped by 5.4 percent to 420,000.

A National Association of Home Builders survey this week showed builders are growing more confident about the single-family market.