Last month’s decline in starts was largely anticipated as groundbreaking activity has been running well ahead of permits approvals over the past several months, especially in the single-family housing segment.
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The seasonally adjusted rate of new building permits slipped in August to 1.139 million, down 0.4% from the downwardly revised July rate of 1.144 million and 2.3% below the August 2015 rate of 1.166 million. Single-family permits jumped by 3.7 percent to 737,000.
Annual housing starts are still below the 25-year average of roughly 1.3 million, even after having rebounded from the depths of the housing crash that triggered a recession almost nine years ago.
Housing starts came off last month’s positive news, posting a considerable slowdown in home building. “On a year-over-year basis, single-family starts are up 9 percent while multifamily construction continues to level off at a solid level as that sector seeks to find a balance between supply and demand”.
Officials a the Federal Reserve were due to gather on Tuesday for a two-day policy meeting.
Despite the mostly dreary data on housing starts, home builders are expressing renewed enthusiasm about their work: The September numbers on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for newly built, single-family homes saw a six point leap to 65 from a downwardly revised August reading of 59.
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 US central bank to leave interest rates unchanged on Wednesday. The broader PHLX housing index, which includes builders, building products and mortgage companies, fell 0.76 percent. They were projected to rise to a 1.17 million rate, according to the survey median.
Housing market strength boosted Lennar Corp’s profits in the third quarter.
The figures represent a pause after a spell of strong gains, and permits show that single-family home construction in the South may bounce back.
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Demand for housing is caused by a tightening labor market triggering growing wages.
