Stops in Housing Starts

October 18, 2018
Stacks of pumpkins and gourds
Photo: Unsplash/Joseph Tury

In September 2018, housing starts decreased 5.3 percent, translating to a 1.201 million seasonally-adjusted annual rate, according to the latest Department of Commerce data. Year-to-date, starts had 6.4 percent growth. 

The data is taken as another sign of a slowdown, though MarketWatch notes that government new-home data is "notoriously choppy and prone to sizable revisions." While starts had a monthly decrease in September, they were up 3.7 percent annually, and permits were down one percent annually, and 0.6 percent over August's data. The rising costs of materials are another headwind for builders, “Contractors are paying more for the materials they use and workers they employ but aren’t able to pass most of those new costs on to their clients,” said Ken Simonson, chief economist for the Associated General Contractors of America. The trade group estimates that contractors raised their asking prices of customers by about 3.5 percent through September.

Analysts watch the pace of single-family starts closely, because nearly all single-family houses are built for purchase, rather than rent. If builders are breaking ground on more houses, it’s a vote of confidence in the economy and buyers’ ability to finance their purchases. In September, those starts were 0.9 percent lower than in August, though nearly 5 percent higher than a year ago.

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