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Mixed Numbers on Housing Starts as Builders Lose Confidence

Phil Hall
Oct 19, 2016
The latest residential construction numbers released by the U.S. Census Bureau and Department of Housing & Urban Development (HUD) report that single-family housing starts in September were at a rate of 783,000

The latest residential construction numbers released by the U.S. Census Bureau and Department of Housing & Urban Development (HUD) report that single-family housing starts in September were at a rate of 783,000, which is 8.1 percent above the revised August figure of 724,000. However, privately-owned housing starts in September were at a seasonally adjusted annual rate of 1,047,000, a nine percent drop from the revised August estimate of 1,150,000 and 11.9 percent below the September 2015 rate of 1,189,000.

Single-family authorizations in September were at a rate of 739,000, a mild 0.4 percent increase from the revised August figure of 736,000. Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,225,000, which is 6.3 percent above the revised August rate of 1,152,000 and is 8.5 percent above the September 2015 estimate of 1,129,000.

Single-family housing completions in September were at a rate of 687,000, which is 8.8 percent below the revised August rate of 753,000.  And privately-owned housing completions in September were at a seasonally adjusted annual rate of 951,000, down 8.4 percent from the revised August estimate of 1,038,000 and down 5.8 percent from the September 2015 rate of 1,010,000.

The cloudy construction numbers were mirrored in the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which took a two-point drop this month to a level of 63.

October’s downward motion is rooted in losses within two of the three HMI components: component gauging current sales conditions fell two points to 69 and the index charting buyer traffic dipped by one point to 46. The index measuring sales expectations in the next six months experienced a one point bump up to 72.

As for the three-month moving averages for regional HMI scores, the West increased two points to 75 while the Northeast, Midwest and South each posted one-point gains to 43, 56 and 65, respectively.

“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”

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