Housing Starts And Permits Weaker Than Expected

Single-family permits continue to rise in what, however, is the main positive in an otherwise weaker-than-expected housing starts and permits report. Looking first at headline totals, starts fell 4.7 percent in September to a 1.127 million annualized rate which is well under Econoday's low estimate. Permits fell 4.5 percent to a 1.215 million rate that is above the low estimate but below the consensus for 1.238 million. Hurricane effects aren't striking despite affected areas accounting for more than 1/4 of the total.

First the good news as permits for single-family homes rose 2.4 percent to an 819,000 rate and a year-on-year gain of 9.3 percent. Single-family homes are the backbone of the housing sector and strength here not only points to greater supply in the new home sales market but also to gains ahead for residential investment in the GDP report.

Not good news are permits for multi-family units which fell 16.1 percent to a 396,000 rate with this yearly rate at minus 24.0 percent. Multi-family units had shown strength earlier in the year but have since tailed off.

Starts for multi-family units fell 5.1 percent to a 298,000 rate with single-family starts down 4.6 percent to 829,000. Single-family completions offer some good news, up 4.6 percent to a 781,000 rate and adding immediate supply to the market.

Regional data do show what is likely hurricane-related weakness in the South, where starts fell 9.3 percent to 527,000 following August's 4.9 percent decline. Yet also weak were starts in the Midwest, down 20.2 percent to 154,000, and also the Northeast, down 9.2 percent at 119,000.

Housing has been generally slowing and looks to end 2017 no better than flat. Still, permits and completions for single-family homes are solid pluses.

Recent History Of This Indicator:
Housing starts in August showed some effects from Hurricane Harvey with weakness in the South pulling down the annualized rate to 1.180 million though further details did show general strength for the key single-family component against sharp weakness for multi-family units. Permits, where weather effects are marginal, rose sharply to a 1.272 million rate where however contributions from single-family and mulita-family units were turned around, with the former soft and the latter strong. The Econoday consensus for total housing starts in September is 1.170 million for what would be a small decline with permits at 1.238 million and a more sizable decline.