A report released by the Commerce Department on Wednesday showed new residential construction in the U.S. tumbled by more than expected in the month of September.
The Commerce Department said housing starts plunged by 8.1 percent to an annual rate of 1.439 million in September after soaring by 13.7 percent to a revised rate of 1.566 million in August.
Economists had expected housing starts to dive 6.4 percent to a rate of 1.475 million from the 1.575 million originally reported for the previous month.
The sharp pullback by housing starts came as single-family starts slumped by 4.7 percent to a rate of 892,000 and multi-family starts plummeted by 13.2 percent to a rate of 547,000.
Meanwhile, the report showed building permits jumped by 1.4 percent to an annual rate of 1.564 million in September after plunging by 8.5 percent to a revised rate of 1.542 million in August.
Building permits, an indicator of future housing demand, were expected to increase by 0.9 percent to a rate of 1.530 million from the 1.517 million originally reported for the previous month.
The bigger than expected rebound came after building permits slumped to their lowest annual rate since June 2020 in August.
Multi-family permits spiked by 7.8 percent to a rate of 692,000, more than offsetting a 3.1 percent slump in single-family permits to a rate of 872,000.
“Housing construction lost momentum heading into the fourth quarter,” said Nancy Vanden Houten, U.S. Lead Economist at Oxford Economic. “We look for the pace of starts to slow to 1.420mn, but the September data and more pessimistic homebuilder sentiment lend a clear downside risk to that forecast.”
She added, “Housing starts may be depressed in the South in the October report following Hurricane Ian, although rebuilding in the region should eventually boost starts.”
On Tuesday, the National Association of Home Builders released a separate report showing a continued deterioration in U.S. homebuilder confidence in the month of October.
The report showed the NAHB/Wells Fargo Housing Market Index slumped to 38 in October from 46 in September. Economist had expected the index to dip to 43.
The housing market index declined for the tenth consecutive month, falling to its lowest reading since August 2012, with the exception of the onset of the pandemic in the spring of 2020.
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