Steel Markets

September Housing Starts Slide on Multifamily Declines

October 17, 2019

Housing starts fell 9.4 percent in September to a seasonally adjusted annual rate of 1,256,000, well below the August revised rate of 1,386,000 due mostly to a large decline in the multifamily sector. Single-family housing rose 0.3 percent from August, while units in buildings of five units or more plummeted 28.3 percent.

All four regions reported declines for total starts and for single-family starts except for the South, which saw single unit construction rise 7.1 percent.

Permit authorizations in September were at a SAAR of 1,387,000, 2.7 percent below August and 7.7 percent higher than a year ago. Single-family authorizations rose 0.8 percent from the previous month and fell 7.5 percent for buildings of five units or more.

Permit authorizations fell 25.7 percent in the Northeast, 5.9 percent in the Midwest, and 2.9 percent in the South, but rose 10.2 percent in the West. Single-family permits rose 13.6 percent in the Midwest and 1.4 percent in the South. The Northeast and West saw single-family permits decline 14.5 percent and 3.3 percent, respectively.

“On a year-to-date basis, single-family starts are 1.8 percent lower than the first nine months of 2018. NAHB’s forecast, and the forward-looking HMI suggest that future data will show slight monthly gains due to recent declines in mortgage interest rates,” said National Association of Home Builders Chief Economist Robert Dietz. “Indeed, single-family permits have been increasing since April, and single-family starts have been rising since May as the home construction rebound continues.”

“We expect additional single-family growth, as areas beyond the exurbs respond to for-sale housing demand and ongoing healthy labor markets,” continued Dietz.

The latest Housing Market Index from NAHB/Wells Fargo shows builder sentiment at its highest level since Feb. 28. Low mortgage rates, job growth and declining inventory supported a housing rebound that began last spring, said NAHB. Single-family construction made steady gains in the second half of this year, but builders remain cautious regarding supply-side constraints and the slowing economy.