August housing starts: Impacted by hurricanes

September 19, 2017

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August housing starts came in at a seasonally adjusted rate of 1,180,000, slightly above consensus of 1,175,000 and 1.4% higher than August of 2016.  While August was slightly lower than the July number, July was revised upward by a strong 35,000 to 1,190,000.  Permits, a leading indicator of future activity, were 1,300,000, up 5.7% compared to last month’s revised number of 1,230,000 and 8.3% higher than August of 2016.  This is the highest number for permits since January.
 
The consensus for this month – only slightly higher than last month and prior year results – reflects tempered expectations driven by the impacts of hurricanes Harvey and Irma along with heightened concern that the hurricanes will exacerbate an already tight labor market, resulting in the slowing of permits, starts and completions in the short term.  With Harvey and Irma directly impacting almost half of the top new housing markets in the country, including areas responsible for over 10% of new permits and starts year to date in 2017, we expect both numbers to remain relatively flat before rebounding slightly throughout Q4 and more aggressively in early 2018 as builders position themselves for what should be a strong spring selling season.
 
Single family starts continued a positive trend, coming in at 851,000, 1.6% higher than last month and 17% higher than last year.  The volatile multi-family number came in at 323,000, up 13% from July but down 23% from last year.  

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