Following a significant rise in new residential construction across the U.S. last month, the Commerce Department published a report on Friday indicating a slight decline in housing starts for September.
According to the Commerce Department, housing starts decreased by 0.5 percent to an annual rate of 1.354 million in September, down from a revised rate of 1.361 million in August, which had previously surged by 7.8 percent.
Economists had projected a decrease of 0.4 percent, bringing the annual rate of housing starts to 1.350 million from the originally reported 1.356 million for the preceding month.
This small reduction in housing starts was largely due to a sharp decline in multi-family starts, which outweighed an increase in single-family starts.
Multi-family starts dropped 9.4 percent to a rate of 327,000 in September, following a 10.0 percent fall to a rate of 361,000 in August.
Conversely, single-family starts increased by 2.7 percent to a rate of 1.027 million in September after soaring by 16.1 percent to a rate of 1.000 million in August.
The report also indicated a notable decline in building permits, which fell by 2.9 percent to an annual rate of 1.428 million in September after a 4.6 percent surge to a revised rate of 1.470 million in August.
Building permits, which serve as an indicator of future housing demand, were anticipated to decrease by 1.0 percent to an annual rate of 1.460 million from the originally reported 1.475 million for the previous month.
Multi-family permits plummeted by 9.0 percent to a rate of 458,000, significantly exceeding a 0.3 percent increase in single-family permits, which rose to a rate of 970,000.
“Both permits and starts (especially single-family starts) are progressing at a strong pace compared to the somewhat muted builder sentiment readings, yet they correspond well with the fluctuations in mortgage rates,” stated Nationwide Economist Daniel Vielhaber.
“Accordingly, home construction is expected to remain robust through the end of the year,” he continued. “At worst, it is not anticipated to revert to the recent lows observed during the summer months.”
On Thursday, the National Association of Home Builders released a different report revealing that homebuilder confidence in the U.S. saw a slight improvement in October, exceeding expectations.
The report revealed that the NAHB/Wells Fargo Housing Market Index rose to 43 in October, up from 41 in September, while economists had predicted the index to edge up to 42.
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