U.S. Housing Starts Fell, Permits Rose in August -- 2nd Update
September 19 2017 - 12:39PM
Dow Jones News
By Laura Kusisto and Ben Leubsdorf
WASHINGTON -- U.S. single-family housing starts continued to
edge higher in August, in what could be the last snapshot of the
market's health before the cleanup from major hurricanes begins to
skew construction activity.
Overall housing starts slipped 0.8% in August from the prior
month to a seasonally adjusted annual rate of 1.18 million, driven
by continued steep declines in multifamily building, the Commerce
Department said Tuesday.
Single-family starts, however, rose 1.6% in August, even as
starts for buildings with two or more units and fell 6.5%.
The report offers a mixed picture of a market in which
single-family construction is gradually improving while multifamily
construction is declining significantly due to an oversupply of
apartments in many urban markets.
Starts were up 2.7% in the first eight months of 2017 compared
with the same period a year earlier. Permits rose 7.5% from the
first eight months of 2016. The three-month moving average for
single-family home starts was the highest since the recession.
U.S. median household income, adjusted for inflation, rose to a
new record in 2016, surpassing the previous peak in 1999, the
Census Bureau reported last week, as Americans enjoy a period of
sustained income growth and economic prosperity.
Despite those gains, new construction remains weak due to a
shortage of labor, lack of available land and other factors.
"Almost every other item of investment, everything is up and
recovered, but housing construction has not recovered," said Chris
Rupkey, chief financial economist at MUFG Union Bank. "It's the
missing piece of the puzzle."
Monthly data on housing starts tend to be volatile and
imprecise; August's 0.8% loss came with a margin of error of 9.6
percentage points. The 5.7% rise for permits had a 2-point margin
of error.
Residential building permits, which provide a less volatile read
on the market, rebounded in August. Permits, which typically lead
starts by a month or two, rose 5.7% to a 1.3 million annual rate
last month.
Permits fell 1.5% for single-family houses but jumped 19.6% last
month for apartment buildings and other multifamily buildings. Both
starts and permits fell in July, but revisions in Tuesday's report
showed the declines weren't as steep as earlier estimated.
Limited supply and fast-rising prices have squeezed many
would-be home buyers this year, despite mortgage rates that moved
lower during the spring and summer. In July, purchases of
previously owned homes and newly built single-family homes both
fell from the previous month.
August is likely to provide the last indication of the health of
the housing market before storms in Florida and Texas weigh on the
data. The Commerce Department on Tuesday said hurricane-affected
counties in Florida and Texas accounted for about 13% of total U.S.
building permits last year.
"This is a good time to do a status check on the market and
generally speaking single-family construction continues its gradual
improvement," said Robert Dietz, chief economist at the National
Association of Home Builders.
Hurricane Harvey hit the Gulf Coast in late August, followed by
Hurricane Irma striking Florida earlier this month. The storms have
started to scramble U.S. economic indicators, pushing up jobless
claims in recent weeks and depressing industrial production during
August, and home-construction data could be clouded for several
months.
Granger MacDonald, chairman of the National Association of Home
Builders, on Monday said builder confidence dimmed this month as
"recent hurricanes have intensified our members' concerns about the
availability of labor and the cost of building materials."
New-home construction has ground to a crawl in the weeks after
the storm in affected areas of Texas and Florida, but should begin
to pick back up as the rebuilding commences.
In Texas, repairing damaged homes is likely to strain an already
tight labor market, dampening construction activity. But rebuilding
new homes could eventually boost home starts. Houston builders were
on track to build about 30,000 homes this year -- about as many as
were destroyed in the storm.
"There's a pause and a reset going on in Houston, but I think in
a few months we'll see things return to normal," said Scott Norman,
executive director of the Texas Association of Builders.
Economic forecasters expect the storms will cause weaker growth
in the short run, but activity should pick up in subsequent
quarters as rebuilding efforts gain traction.
Write to Laura Kusisto at laura.kusisto@wsj.com and Ben
Leubsdorf at ben.leubsdorf@wsj.com
(END) Dow Jones Newswires
September 19, 2017 12:24 ET (16:24 GMT)
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