New home construction decreased yet again in September after a drop in August, according to a new report from the U.S. Census Bureau.
Privately-owned housing starts dropped in September to 1.04 million. This is down 9% from the revised August estimate of 1.15 million and down 11.9% from last year’s 1.18 million.
Of those, single-family housing starts increased 8.1% from August to 783,000.
“The headline number in this month’s report doesn’t tell the full story,” Quicken Loans Vice President Bill Banfield said. “Single-family starts made significant gains in September, which is welcome news to a housing market that has continued to lack inventory, especially in the entry-level sector.”
Not everyone, however, shares this optimism.
“The 12-month rolling total of housing starts was up year-over-year, but the rate of increase is slowing,” Trulia Chief Economist Ralph McLaughlin said. “Five of the past six months have shown slowing growth in starts, which means homebuyers will see fewer new homes come on to the market in the next six to 12 months.”
“While housing starts continue to inch up to their pre-recession average, they’re only about 75% back to normal,” McLaughlin said. “Housing completions, which represent tangible new supply for homebuyers, is even lower at 67%.”
Privately owned housing completions decreased 8.4% monthly and 5.8% annually to 951,000. Single-family completions decreased even more at 8.8%.
In fact, one expert points out that while housing continues to underperform, it isn’t getting the attention that it needs.
“Housing continues to be the biggest underperformer in the economy, but the subject hasn't really come up in this election, for either side,” said Brent Nyitray, iServe Residential Lending director of capital markets.
Privately-owned housing units authorized by building permits increased 6.3% from August to 1.22 million. This is also 8.5% above September 2015.
Of those, single family building permits increased only slightly at 0.4% from August.
“The sharp drop in housing starts in September was concentrated in the volatile multifamily sector, so shouldn’t ring too many alarm bells,” Capital Economics Property Economist Matthew Pointon said. “And with building permits seeing a strong pick-up, much of that weakness should be reversed next month.”
Other experts point out that housing isn’t running out of steam, despite low inventory. Click here to see why.