Housing starts steady, permits rise ahead of hurricanes
Steady new-home construction in August together with a jump in permits indicate the housing market was moving ahead before a likely temporary hit from Hurricanes Harvey and Irma, government figures showed Tuesday.
Residential starts fell 0.8% month-to-month to a 1.18 million annualized rate (the estimate was 1.174 million) after an upwardly revised 1.19 million pace the prior month. Single-family home starts rose 1.6% to 851,000; multifamily starts, such as apartment buildings and condominiums, fell 6.5% to 329,000. Permits, a proxy for future construction, rose 5.7% to a 1.3 million rate (the estimate was 1.22 million), the highest since January, from a 1.23 million pace. Data collection on housing starts was below normal in Texas and Florida areas affected by storms.
The pace of groundbreaking may show swings for several months following Harvey's extensive damage to southeast Texas in late August and Irma's landfall in Florida in early September. Higher prices for construction materials also have the potential to pinch the industry, which is already contending with a shortage of workers and ready-to-build lots.
Reflecting the heightened concerns, builder sentiment was weaker than estimated in September. At the same time, the solid job market and still-low mortgage costs will probably continue to underpin housing demand. Activity may rebound later this year and in early 2018 as rebuilding efforts begin in areas hit by the Atlantic hurricanes.
Data on housing starts and completions were collected for about 60% of cases in Texas and Florida counties affected by the storms, compared with a typical response rate of 95%, according to a special notice released with Tuesday's report. Responses for permits were “not significantly lower than normal” in areas affected by the storms, the government said.
Texas counties affected by Harvey accounted for about 4% of U.S. housing units authorized by permits in 2016 and about 8% in the South region, the government said. September data will reflect the impact of Irma in Florida, where the affected counties accounted for about 9% of U.S. total housing units authorized by permits in 2016 and 18% of those in the South.
The report shows a wide margin of error, with a 90% chance that the August housing-starts figure was between a 10.4% drop and an 8.8% gain. Single-family permits fell 1.5% to an 800,000 rate, while multifamily permits rose 19.6% to 500,000. On housing starts, the Northeast and South regions posted declines, while groundbreakings rose in the Midwest and West. Permits in the West rose to a 10-year high of 362,000.
The report was released jointly by the Census Bureau and Department of Housing and Urban Development in Washington.