September US Housing-Starts Plunge Surprises Forecasters

Total U.S. housing starts in September 2016 startled economists, whose consensus projections expected to regain some of the ground lost in August, with a 9.0% drop. According to monthly estimates issued by the Census Bureau and the Department of Housing and Urban Development, single-family starts were actually quite strong, rising 8.1% to a 783,000 seasonally adjusted annual rate in September.

Since the first of 2016, single-family housing starts are 8.6% higher than 2015’s year-to-date total as of September.

But a 38.0% plunge in multifamily starts tamped total U.S. residential construction starts down to a 1.047-million-unit adjusted annual rate, a depth not seen in more than a year.

“Housing permits, which typically lead housing starts and are far less volatile, rose a solid 6.3%,” noted the Wells Fargo Economics Group in its analysis of September numbers. “With the level of permits running ahead of starts, we expect starts to pick up in the coming months.

“Although builder confidence retreated in October, the trend still suggests upward momentum in single-family construction. The National Association of Home Builders/Wells Fargo homebuilders’ survey rose to 62.3 on a three-month-moving-average basis.”

Single-family permit issuance – an indication of starts to come – rose 0.4% from a solid August performance and was 4.4% greater than September of 2015. Single-family permits from January to September of 2016 are 8.1% above the pace set over the first nine months of 2015.

Regionally, single-family starts showed strength in three of four geographic segments, lead by growth in the Northeast. Year-to-date starts suggest a solid trend in single-family housing growth.

September Single Family Starts

* September starts are seasonally adjusted annual rates. Change in year-to-date starts based on monthly actuals.

Multifamily starts suffered the inverse, with gains in the West outweighed by steeply falling activity in the other three regions. It should be noted, however, that year-to-date multifamily housing construction in the Midwest is charging forward, with more than 32% growth. 

September Multifamily* Starts

* Multifamily starts here include any building that comprise two or more housing units. September starts are seasonally adjusted annual rates. Change in year-to-date starts based on monthly actuals.