U.S. housing starts decreased last month for the fifth time in six months, as builders felt the brunt of construction delays as well as labor and material shortages caused by hurricanes in Florida and Texas.
Continue Reading Below
Housing starts fell 4.7% in September from the previous month to a seasonally adjusted annual rate of 1.127 million, the Commerce Department said Wednesday. Single-family starts declined 15.3% in the south, driven by the effects of hurricanes Irma and Harvey, which caused builders to delay beginning new projects and made labor and material significantly more expensive in those areas.
Residential building permits, which can signal how much construction is in the pipeline, fell 4.5% to an annual pace of 1.215 million last month.
Housing-starts data are volatile from month to month and can be subject to large revisions. Looking beyond monthly volatility, starts in the first nine months of the year were up 3.1% from the same period in 2016. Permits during this period increased 5% from a year earlier.
Robert Dietz, chief economist at the National Association of Home Builders, said housing starts are likely to remain depressed for several months due to the recent hurricanes.
Mr. Dietz still anticipates that housing starts for the year overall are likely to be up modestly from last year, due to continued gradual improvement in new single-family construction activity.
Continue Reading Below
"Over the next few months I wouldn't expect large declines but movement along that new normal," he said.
Mr. Dietz said builders across the country are seeing shortages and rising costs of materials, which are being redirected to Houston and Florida. The rebuilding effort also is likely exacerbating an existing shortage of workers in the sector. The number of unfilled construction jobs in August reached its highest level since February 2007, according to a National Association of Home Builders analysis of Labor Department data released last week. The number of unfilled jobs is expected to increase in the months ahead.
Construction is one of the industries most affected by weather-related events, along with mining and hospitality, according to Jed Kolko, chief economist at job-search website Indeed.
New residential construction reached a postrecession high in October 2016 but has eased slightly since and remains well below levels reached in the years preceding the 2008 financial crisis. Even as single-family home construction begins to pick up, multifamily construction is declining.
So far this year, single-family home starts are up 9.1%, while starts for buildings with five or more units have declined by the same amount.
"When you actually look into the numbers a bit closer it is not all doom and gloom; [it is] mostly because of a fall in multifamily homes," said Ralph McLaughlin, chief economist at Trulia. "Single-family starts look somewhat healthy."
The National Association of Home Builders on Tuesday said its index that measures confidence in the market for new single-family homes rose to 68 in October from 64 in September, slightly below the postrecession peak touched in March.
"This month's report shows that home builders are rebounding from the initial shock of the hurricanes," said Home Builders Chairman Granger MacDonald, a builder and developer from Kerrville, Texas. "However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages."
Sarah Chaney contributed to this article
Write to Laura Kusisto at firstname.lastname@example.org
(END) Dow Jones Newswires
October 18, 2017 11:36 ET (15:36 GMT)