New residential construction in the U.S. pulled back by much more than expected in the month of August, the Commerce Department revealed in a report on Tuesday.
The report said housing starts tumbled by 5.8 percent to an annual rate of 1.142 million in August from the revised July estimate of 1.212 million.
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.
The much steeper than expected drop in housing starts reflected notable declines in both single-family and multi-family starts.
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.
Additionally, the report said housing starts in the South plummeted by 14.8 percent to a rate of 543,000. Starts rose in the other three regions of the country.
The Commerce Department also said building permits, an indicator of future housing demand, dipped by 0.4 percent to a rate of 1.139 million in August from a revised 1.144 million in July.
The decrease surprised economists, who had expected building permits to climb by 1.3 percent to a rate of 1.167 million in August from the 1.152 million originally reported for the previous month.
The modest drop reflected a sharp pullback in multi-family permits, which tumbled by 7.2 percent to a rate of 402,000. Single-family permits jumped by 3.7 percent to 737,000.
The report said building permits fell by 3.4 percent in the South but increased in the other four regions of the country.
Compared to the same month a year ago, housing starts were up by 0.9 percent in August, while building permits were down by 2.3 percent.
The National Association of Home Builders released a separate report on Monday showing a jump in homebuilder confidence in the month of September.
The report said the NAHB/Wells Fargo Housing Market Index surged up to 65 in September from a downwardly revised 59 in August.
Economists had expected the index to come in unchanged compared to the 60 originally reported for the previous month.
With the substantial increase, the housing market index reached its highest level since hitting a matching reading in October of 2015.
by RTT Staff Writer
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