You are here
US housing starts fall more than forecast in August
US HOME starts fell more than forecast in August, reflecting less construction of apartments and a decline in the tropical storm-hit South, representing a pause in momentum for a housing market that has been a key source of fuel for the economy.
Residential starts decreased 5.1 per cent to a 1.42 million annualised rate from the month before, said a government report released on Thursday.
The decline follows a downwardly revised 17.9 per cent surge in the prior month. The median forecast in a Bloomberg survey called for a 1.49 million pace in August.
Applications to build - a proxy for future construction - decreased 0.9 per cent, reflecting fewer permits for multi-family housing. This followed a 17.9 per cent surge in July that was the largest in 12 years.
The 1.47 million rate of permits was below the median estimate for 1.51 million, though it remains above the February pre-pandemic rate.
An increase in starts of single-family housing, as well as a stronger home-construction market than the year before are consistent with one of the best-performing areas of the economy.
Firm demand, reflecting record-low interest rates and changing living preferences as a result of the pandemic, has propelled homebuilder sentiment to a record high.
Housing starts rose in two of four regions. In the South, new construction decreased, reflecting in part tropical storms along the Gulf Coast.
A pickup in building permits in the region to the highest since February 2007, however, indicates homebuilding will firm in coming months.
New construction advanced in the Midwest to an almost 14-year high and also climbed in the West.
The government's retail sales report on Wednesday showed the secondary effects of the recent strength in housing.
Spending at furniture and home furnishing outlets increased 3.8 per cent in August from the prior year, while receipts at building materials stores were up 15.4 per cent, showed the Commerce Department data.
The pace of strength in the housing market is nonetheless at risk of slowing if the broader economy weakens.
Congress is yet to pass a new stimulus package to support small businesses and the unemployed, which could hurt family incomes and their ability to afford new homes.
A separate report on Thursday showed that the number of Americans applying for jobless benefits resumed its decline, signalling a gradual improvement in the battered labour market.
Single-family housing starts rose to a 1.02 million annualised rate, the fastest since February.
Multi-family starts, a category that tends to be volatile and includes apartment buildings and condominiums, dropped 22.7 per cent to a 395,000 annualised pace, Thursday's report showed.
Permits to build one-family units increased 6 per cent to a 1.04 million annual rate, while the number of single-family projects authorised but not yet started rose to 99,000 in August - the most since the end of 2018. BLOOMBERG