Permits also down amid multifamily weakness
Housing starts and the intention to build new homes both decreased in September.
Figures from the HUD and Commerce Dept. reveal a 5.3% decline in September to a seasonally adjusted annual rate of 1.2 million units with single-family starts down 0.9% to 871,000 units and multifamily down 15.2% to 330,000.
Permits issued also fell, by 0.6% with multifamily down 7.6% to a 390,000 unit annualized rate and single-family up 2.9% to 851,000.
“This report is consistent with our forecast for gradual strengthening in the single-family sector of the housing market following the summer soft patch,” said NAHB Chief Economist Robert Dietz. “A growing economy coupled with positive demographics for housing should keep the market moving forward at a modest pace in the months ahead.”
NAHB chairman Randy Noel added that the figures were in line with builder sentiment which is positive but concerned about supply-side issues including labor shortages.
Other factors also weighing
LendingTree chief economist Tandayi Kapfidze says that there are several factors for declining housing starts.
“Rising rates, prices and taxes are contributing to the housing slow down. Average mortgage rates rose to 4.90% last week according to Freddie Mac, the highest in seven years. This has made housing about 10% less affordable than a year ago. As there are less buyers at each price point, the appropriate market response is a slowdown in sales and an eventual easing in price momentum,” he said.
Meanwhile, First American chief economist Mark Fleming says that nationwide starts are likely to be impacted in the months ahead due to the rebuilding needed in the wake of Hurricane Michael.
“Efforts to repair damage from Hurricanes Florence and Michael will likely slow housing starts in coming months, as resources are redirected toward repairs and rebuilding efforts. Overall housing starts fell 5.3 percent in September compared to last month, driven by a 13.7 percent decrease in the South, which may reflect disruptions from Hurricane Florence,” he said, adding that the rebuilding will exaggerate the construction labor shortage.
