US housing starts slide 3.1% as hurricanes impact South region
Housing starts decreased 3.1% last month to a 1.31 million annualised rate
US HOUSING starts declined in October to the slowest pace in three months, as hurricanes exacerbated an easing in construction activity more generally.
Housing starts decreased 3.1 per cent last month to a 1.31 million annualised rate, reflecting a steep decline in the South, according to government data released on Tuesday (Nov 19).
Construction activity in the South, which makes up the largest share of homebuilding in the country, slumped 8.8 per cent as the region’s builders put off projects in the wake of hurricanes Helene and Milton. Housing starts have struggled to gain traction this year against a backdrop of a growing number of new homes for sale and mortgage rates near 7 per cent.
While construction of single-family homes had picked up recently, builders are using incentives to boost sales as the market awaits a decline in borrowing costs that may be slow to emerge.
Economists are projecting only a modest decline in borrowing costs next year. The 30-year fixed-rate mortgage rate rose to 6.86 per cent earlier this month after falling to a two-year low in late September, according to the Mortgage Bankers Association. In its latest forecast, the bankers group only sees rates falling to 5.9 per cent by the end of next year.
Some builders, including DR Horton in its late-October earnings call, said the lead-up to the presidential election was creating uncertainty and keeping would-be buyers at bay.
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New single-family home construction fell 6.9 per cent to a 970,000 annualised rate in October. Multifamily housing starts increased 9.6 per cent, the first gain in three months.
Building permits, a proxy for future construction, eased 0.6 per cent to a 1.42 million annualised rate. Permit authorisations for single-family home construction ticked up to the fastest pace since April.
Residential construction subtracted from economic growth in the second and third quarter. Before the October starts data, the Federal Reserve Bank of Atlanta’s GDPNow forecast penciled in a slight subtraction in fourth quarter.
In addition to the drop in the South, starts in the Northeast slumped nearly 33 per cent to the slowest pace since May. In the West, new construction jumped to the highest level since the start of the year.
The government report on Tuesday showed completions of new single-family homes decreased to a 986,000 annual pace, the weakest since March, and reflected steep drops in the West and South.
The number of projects under construction slipped nearly 2 per cent to a 1.47 million annualised rate, the lowest in three years. BLOOMBERG
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