Housing Starts Stumble Again


Housing starts fell sharply again in September, to lows not seen in nearly 18 months, HUD and the Census Bureau reported yesterday.

The report said privately owned housing starts in September fell to 1.047 million, seasonally adjusted, 9.0 percent lower than August’s revised estimate (1.150 million) and nearly 12 percent lower than a year ago (1.189 million). Single-family housing starts in September, however, rose to 783,000, 8.1 percent higher than August (724,000. The September rate for units in buildings with five units or more plunged by nearly 39 percent to 250,000 from August (409,000).

Regionally, every area of the country saw unusually high declines, except for the West, where starts remained unchanged at 282,000 from August and fell by 4.4 percent from a year ago. In the South, starts fell by 5.3 percent in September to 532,000 units from 562,000 in August and fell by 15.6 percent from a year ago. In the Northeast, starts plunged by 36 percent to 87,000 units in September from 136,000 in August and fell by 31.5 percent from a year ago. In the Midwest, starts fell by 14.1 percent to 146,000 units in September from 170,000 in August but improved by 6.6 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., noted consensus estimates projected a partial reversal in housing starts in September following a sharp decline in August. “However, all of the weakness was concentrated in multifamily, which fell 38.0 percent during the month, while single-family rose 8.1 percent,” he said. “Strength in purchase applications and permits suggest continued gains.”

Ralph McLaughlin, chief economist with Trulia, San Francisco, suggested more trouble ahead, saying slowing housing starts means no jump in supply for buyers in early 2017.

“The 12-month rolling total of housing starts was up year-over-year, but the rate of increase is slowing,” McLaughlin said. “Five of the past six months have shown slowing growth in starts, which means homebuyers will see fewer new homes come on to the market in the next 6-12 months.”  

McLaughlin noted while housing starts continue to inch up to their pre-recession average, they’re only about 75 percent back to normal. “Housing completions, which represent tangible new supply for homebuyers, is even lower at 67 percent,” he said. “Though homebuilders continue their slow and steady charge, there is much room for growth headed into 2017.”

The report said housing permits, which typically lead housing starts and are less volatile, rose by 6.3 percent. “With the level of permits running ahead of starts, we expect starts to pick up in the coming months,” Vitner said.

As noted, privately owned housing units authorized by building permits in September rose by 6.3 percent to 1.225 million from August’s 1.152 million and rose by 8.5 percent from a year ago (1.129 million). Single-family authorizations in September rose by 0.4 percent of 739,000; authorizations of units in buildings with five units rose by 17.2 percent to449,000.

Privately owned housing completions in September fell by 8.4 percent to 951,000 from August’s revised 1.038 million and fell by 5.8 percent from a year ago (1.010 million). Single-family housing completions fell by 8.8 percent to 687,000; the September rate for units in buildings with five units or more fell by 10.1 percent to 250,000.