U.S.: Housing Starts and Permits Plummet in September

Daily Forex Fundamentals | Written by TD Bank Financial Group | Oct 17 08 15:17 GMT |

* U.S. housing starts declined to their lowest since 1991.
* Building permits were also very weak, falling 8.3% M/M.
* The retrenchment in building activity means that housing will remain a drag on economic activity.

U.S. housing starts declined by a whopping 6.3% M/M in September, following the upwardly revised 8.1% M/M drop in August (previously reported as -6.2% M/M). The drop brought new residential construction to 817K, which is the lowest level of new construction activity since 1991. Residential permit approvals were also weak, falling by 8.3% M/M, following the 8.5% M/M drop in the prior month. And at 786K, permits are at their lowest level since 1991. On a year ago basis, residential starts and permits are now down 34.8% Y/Y and 36.2% Y/Y, respectively.

The details of the report were downright sour. The important single-family units construction declined by its largest margin in two years, posting a whopping 12.0% M/M drop in September, bringing the number of new single-family homes built to 544K - its lowest level since late 1981. On the other hand, the construction of condos rose by 7.5% M/M, with the number of multi-units homes built rising to 273K.

This housing sector report was simply awful, as it suggests that the U.S. housing market correction may have quickened in recent months. And with the U.S. economy appearing to have softened considerably in recent months, and the labour market remaining in a very depressing state, there is little to suggest that a turnaround in activity will occur any time soon. Nevertheless, while the retrenchment in residential building activity will mean that the U.S. housing sector will remain a source of drag for economic activity, it is nonetheless one important step in facilitating a turnaround in the sector as it will slow the pace of inventory accumulation of unsold new homes.

TD Bank Financial Group

The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.