WASHINGTON: US home-building fell to a one-year low in September as Hurricanes Harvey and Irma disrupted the construction of single-family homes in the South, suggesting housing probably remained a drag on economic growth in the third quarter.
The report from the Commerce Department also showed a decline in building permits, raising concerns that the housing market recovery was stalling. Home-building and sales are well below their peaks before the housing bubble burst in 2006.
“Residential construction should be a hefty drag on third-quarter GDP growth,” said Michael Gregory, deputy chief economist at BMO Capital Markets in Toronto. “Housing activity has shifted from leading the economic expansion to now just following it, at best.”
Housing starts decreased 4.7 per cent to a seasonally adjusted annual rate of 1.127 million units last month, the Commerce Department said. That was the lowest level since September 2016 and marked the third monthly decline in starts.
Ground-breaking tumbled 9.3 per cent in the South to the lowest level since October 2015, with single-family home-building in the region plunging 15.3 per cent to more than a one-year low. The South, which was pummelled by Harvey and Irma, accounts for almost half of the nation’s home-building.
Building permits fell 4.5 per cent to a rate of 1.215 million units in September. Permits in the South dropped 5.6 per cent. The Commerce Department said the areas in Texas and Florida impacted by the storms accounted for about 13 per cent of US building permits in 2016.
Economists had forecast housing starts falling to a rate of 1.175 million units last month and building permits slipping to a rate of 1.250 million units.
The PHLX index of housing stocks was flat, under-performing a broadly firmer US stock market, and shares in the nation’s largest home-builder, DR Horton, fell 0.4 per cent.
The dollar rose marginally against a basket of currencies while US Treasuries fell.
Even before the storms struck, residential construction had almost stagnated this year amid shortages of land and skilled labour as well as rising costs of building materials. — Reuters