New construction on U.S. housing units was essentially flat in September at a seasonally adjusted annual rate of 590,000, as a big drop in multifamily units was offset by an increase in starts of single-family homes, the Commerce Department estimated Tuesday.
With September’s 0.5 percent increase, housing starts have been flat for four straight months after a big rebound earlier in the year from historic lows. Since the bottom in January, housing starts have risen 21 percent.
August’s starts were revised lower to a 587,000 pace from 598,000 previously reported.
Economists surveyed by MarketWatch were expecting a slightly stronger report, with starts forecasted to rise to a 607,000 rate.
Starts of single-family homes rose 3.9 percent to a 501,000 rate, while starts of multifamily units dropped 15.2 percent to 89,000.
In the past year, starts are down 28.2 percent. Starts of single-family homes are off 8.7 percent, while starts of apartments and condos have plunged 69 percent.
Building permits fell 1.2 percent to a seasonally adjusted annual rate of 573,000 in September. Building permits for single-family homes dropped 3 percent to a 450,000 rate. Many economists consider single-family permits to be the most important number in the government’s release.
Permits for apartments and condos rose 6 percent to 123,000.
After 14-straight quarters of declines, many economists expect that residential investment will finally add to gross domestic product growth in the current quarter, which ended in September.
Since the bubble began to deflate nearly four years ago, builders have been cutting back on production in an effort to bring supply back down to match much weaker demand for housing. Starts are down about 70 percent from the peak at the height of the housing boom. In all of 2008, 906,000 housing units were started. In 2007, it was 1.36 million.
The number of units completed in September fell 10.2 percent to an annual rate of 693,000, the lowest on record. The number of completed single-family homes dropped 8.7 percent to a record-low 464,000. The history for that data goes back to 1968.
On Monday, the National Association of Home Builders said its members got more discouraged in October, faced with the imminent expiration of the federal government’s $8,000 subsidy for first-time home buyers. The home builders’ index fell to 18 from 19 in September, indicating about one in six builders have a positive view of the market.
The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In most months, the government can’t be sure whether starts increased or decreased. In September, for instance, the standard error for starts was plus or minus 9/9 percent. Large revisions are common.
The standard error for monthly building permits data is much lower at plus or minus 1.8 percent.
It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 590,000 annualized, up from 580,000 in the four months ending in August.
In a separate report, the Labor Department said producer prices fell 0.6 percent in September. The core producer-price index—which excludes food and energy goods—fell 0.1 percent.
(c) 2009, MarketWatch.com Inc. Source: McClatchy-Tribune Information Services.