The pace of US homebuilding has slowed in September for the fifth time in the past six months, following the effect of hurricanes that hit the southern part of the U.S., but also due to shifts in homebuying preferences.
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Housing starts slide in September
The rate of US home construction has slowed in September.
Housing starts fell at a 4.7% month-over-month clip to a seasonally adjusted annual rate of 1.127 million, missing the Bloomberg consensus of 1.175 million.
It was still slightly above the rate of 1.062 million in housing starts in September 2016, according to US Census data.
"Weather had some impact," said David Berson, chief economist at Nationwide. "But it's not the major explanation."
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Though the hurricanes had a negative impact on starts in the South, the Northeast and the Midwest also saw a drop, indicating that weather was not the only factor, Berson said.
Residential building permits, an indication of future starts, fell 4.5% to an annual pace of 1.215 million, missing expectations of 1.245 million permits. However, there was a "clear break" between permits for single-family units, which was up 2.4% and permits for multi-family units, which was down 16.1%.
Homeowners are moving away from rentals toward owner-occupied homes driven by demand from millennials, Berson said. As the cohort gets older, they are looking at owner-occupied housing as a way to build wealth with housing prices rising and mortgage rates staying so low.
Moreover, the US housing industry has faced unprecedented labor shortages in construction. The latest job numbers show that there was a decline in residential construction employment by 3,900 though there was an increase in specialty trades, like plumbing and electrician.
He added that the demand for renovation pulls away laborers from new construction projects. Coupled with low inventory and high demand, homebuilders have not been able to keep pace with people looking to buy homes.
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