Aug. housing starts slide 0.8%; permits up 5.7%

WASHINGTON – The pace of housing starts fell by 0.8% to a 1.180 million seasonally adjusted annual rate in August, slightly ahead of expectations for a rise to a 1.170 million pace following upward revisions to the previous two months, data reported by the Commerce Department Tuesday morning showed.

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Housing starts fell 7.9% in the South region, so there may have been some impact from Hurricane Harvey, which hit late in the month. However, Commerce reported that the response rates for permits filing in the affected areas was "not significantly lower than normal," but that reporting on starts and completions were only collected in about 60% of the case in the affected areas. As a result, those homes were considered to be in the previous state--either not started or under construction.

The impact of Hurricane Irma in Florida will show up in the September data released next month, but housing starts should turn upward in the coming months as homes in the impacted regions will need to be rebuilt. Commerce said total rebuilds will count toward permits and starts, but that repairs of homes would not.

Housing starts of single-family homes rose by 1.6% in August after a 2.2% decline in the previous month. Starts of multi-family homes fell 6.5% after a 2.2% July decrease, based on an MNI calculation.

The pace of unadjusted starts stands only 0.5% above its year ago level, a sign that home building has held steady. The NAHB index for September fell sharply, which the NAHB attributed to concerns about shortages due to the hurricanes.

Building permits jumped 5.7% in the month, while homes permitted but not started rose 7.8%, suggesting starts should rise in September for much of the country. Single-family permits were down 1.5% while multi-family permits surged 19.6%.

Given the only modest decline in August starts and the upward revisions to the previous months, the third quarter average for starts was up from the second quarter average, as were permits. However, with the addition of likely disappointing September data, the pace of growth is likely to slow with next month's data.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.
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