New Residential Construction Tumbles in September
Multifamily Nosedives; Single-Family Moves High
The new residential construction report for September contained a mixed bag of data, as total housing starts plummeted nine percent from August, according to the Census Bureau.
Multifamily construction plunged 38.9 percent for the month, but single-family starts jumped 8.1 percent to its highest level in seven months. Total starts are 11.9 percent lower than September 2015, but single-family starts are 5.4 percent higher year-over-year, while the multifamily sector has nosedived 42.5 percent from a year ago.
The starts data startled economists, according to the For Construction Pros website. The consensus projection was that starts would bounce back after declining 5.8 percent in August.
In a sign that overall starts could pick up in the months ahead, permits posted a solid gain of 6.3 percent month-over-month and are up 8.5 percent from a year earlier. Single-family permits are 0.4 percent higher compared to August, and have risen 4.4 percent from a year ago. Multi-family permits gained 17.2 percent both monthly and annually. Permit issuance jumped 23.6 percent in the Northeast, and rose 15.8 percent in the West and 2.6 percent in the South. The Midwest posted a loss of 5.2 percent.
Completions dropped 8.4 percent in September and have declined 5.8 percent compared to a year ago. Single-family completions fell 8.8 percent for the month, but are up 6.7 percent compared to 2015. Multifamily construction dropped 10.1 percent in September, and has also declined 30.4 percent from a year earlier.
"Single-family starts posted their highest level since February and are consistent with builder sentiment, which has remained firm in recent months," said Ed Brady, chairman of the National Association of Home Builders (NAHB). "Low mortgage rates, along with solid permit and job growth should keep demand for single-family housing moving forward in the months ahead."
On a regional basis, the Northeast recorded the biggest decline in starts, dropping 36 percent month-over-month. The Midwest and South posted losses of 14.1 percent and 5.3 percent, respectively. Starts remained unchanged in the West.
"After strong readings during the summer, multifamily production pulled back in September," said Robert Dietz, chief economist for the NAHB. "Still, we expect the multifamily sector to post a good year in 2016, though down a bit from last year, which was likely the peak year for this cycle."
September Starts Down 2 Percent, Dodge Data Says
The value of new construction starts in September decreased a slight 2 percent to $703.7 billion, according to Dodge Data and Analytics. This follows a 22 percent jump in total starts in August. The housing sector lost momentum in September. Through the first nine months of 2016, total construction starts came to $506.7 billion, down 3 percent compared to the same time frame in 2015.