September Housing Performance Weaker Than Expected
Homebuilders pulled back on construction for a 2nd month running in September, with a dive in apartments offsetting gains in single-family homes.
Building activity was weak in all parts of the nation except the Midwest.
Construction dove 9% in September to a seasonally adjusted annual rate of 1.05-M units, the US Commerce Department reported Wednesday, the slowest pace in 18 months. Construction fell 5.6% in August.
The weakness last month reflected a 38% drop in construction of apartments, which overshadowed an 8.1% rise in single-family construction.
Despite the 2 months of declines, home construction has been one of the bright spots in the economy this year. Builders have been scrambling to keep up with rising demand amid continued strong job gains and low mortgage rates.
The September performance was weaker than expected. Analysts had been forecasting a rebound. But they noted that the smaller apartment segment of construction is often volatile from month to month.
Applications for building permits, a good sign of future activity, posted an increase of 6.3% in September. It was the biggest 1-month gain since last November, pushing activity to an annual rate of 1.22-M units.
By region of the nation, housing starts rose 6.6% in the Midwest, the only region showing a gain. Construction fell 31.5 percent in the Northwest, 15.6% in the South and 4.4% in the West.
A survey of home builder sentiment Tuesday showed that builders’ confidence about the future eased back this month after surging to the highest level in nearly a year in September.