In September, U.S. homebuilding fell to a one-year low as both Hurricanes Harvey and Irma interrupted construction of single-family homes in the South. This also suggest that housing most likely hindered economic growth during in the third quarter.
According to the Commerce Department, housing starts fell 4.7 percent to a seasonally adjusted annual rate of 1.127 million units. This is the lowest level since September 2016 and came after August’s improved rate of 1.183 million units.
In the South, groundbreaking dropped 9.3 percent, the lowest level since October 2015, with single-family homebuilding in the region plummeting 15.3 percent to more than a one-year low. The South is responsible for nearly half of the nation’s homebuilding.
Building permits fell 4.5 percent to a rate of 1.215 million units in September as well.
Prior to the hurricanes, residential construction has declined this year due to land shortages, the shortage of skilled labor and the increasing costs of building materials.
During the second quarter, investment in homebuilding shrunk at a 7.3 percent annualized rate which was the sharpest decline in almost seven years. Because of this, housing deducted three-tenths of a percentage point from gross domestic product in the second quarter.
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Economists believe housing starts to rally in the fourth quarter but warn that rebuilding areas affected by the hurricanes may take away limited labor from other parts of the country, limiting the gains.
In September. single-family homebuilding fell 4.6 percent to a rate of 829,000 units. This section makes up for the largest share of the housing market. Single-family starts increased in the Northeast, Midwest and West. Groundbreaking on single-family housing projects have reduced since jumping to near a 9-1/2-year high in February.
Last month, starts for the unpredictable multi-family housing segment dropped 5.1 percent to a rate of 298,000 units. Single-family home permits increased 2.4 percent, but multi-family homes permits had fallen 16.1 percent.