Steel Markets

Housing Starts Drop but Permits Surge in September

October 19, 2016

Housing starts dropped to a seasonally adjusted annual rate of 1,047,000 in September, according to the U.S. Department of Commerce. The decline was 9 percent below August’s revised estimate and 11.9 percent below the September 2015 rate.

Single family housing starts increased from August by 8.1 percent to 783,000. Starts for apartment housing of five units or more was at an estimated 250,000 units, down 38.9 percent from August’s estimate and 42.5 percent below the year ago level. The Northeast led the drag on starts with a decline of 36.0 percent.

The better news was in building permit authorizations, an indicator of future housing construction. Building permits were up 6.3 percent from August to a seasonally adjusted annual rate of 1,225,000 and were 8.5 percent higher than the September 2015 rate. Single family authorizations edged up 0.4 percent from August and multi-unit buildings increased 17.2 percent.

Permit growth was primarily due to a jump in authorizations in the Northeast and West, up 23.6 percent and 15.8 percent, respectively. Most of that increase was due to multi-unit authorization permits. The South had a total increase in permits of 2.6 percent while the Midwest declined 5.2 percent.

Builder Confidence

The National Association of Home Builders reports builder confidence in the market was solid in its October survey, down two points from 63.

“The October reading represents a mild pullback from a jump in September, and indicates that the housing market continues to make slow and steady gains,” said NAHB Chief Economist Robert Dietz. “Moreover, mortgage rates remain low and the HMI index measuring future sales expectations has been over 70 for the past two months. These factors will sustain continued growth in the single-family market in the months ahead.”