WASHINGTON, Sept 20 U.S. housing starts fell
more than expected in August as building activity declined
broadly after two straight months of solid increases, but a
rebound in permits for single-family dwellings suggested demand
for housing remained intact.
Groundbreaking decreased 5.8 percent to a seasonally
adjusted annual pace of 1.14 million units, the Commerce
Department said on Tuesday. July's starts were unrevised at a
1.21 million-unit pace.
Permits for future construction slipped 0.4 percent to a
1.14 million-unit rate last month as approvals for the volatile
multi-family homes segment tumbled 7.2 percent to a 402,000
unit-rate. Permits for single-family homes, the largest segment
of the market, surged 3.7 percent to a 737,000-unit pace.
Economists polled by Reuters had forecast housing starts
falling to a 1.19 million-unit pace last month and building
permits rising to a 1.17 million-unit rate.
Last month's decline in starts was largely anticipated as
groundbreaking activity has been running well ahead of permits
approvals over the past several months, especially in the
single-family housing segment. The drop left starts just below
their second-quarter average.
Economists expect that residential construction will
contribute to economic growth in the third quarter after being a
small drag on output in the April-June period.
Demand for housing is being driven by a tightening labor
market, which is lifting wages. A survey of homebuilders
published on Monday showed confidence hitting an 11-month high
in September, with builders bullish about current sales now and
over the next six months, as well as prospective buyer traffic.
Groundbreaking on single-family homes dropped 6.0 percent to
a 722,000-unit pace in August, the lowest level since last
October. With permits for the construction of single-family
homes rising last month, single-family home building could
rebound in the month ahead.
The single-family housing market is being supported by a
dearth of previously owned homes available for sale.
Single-family home construction tumbled 13.8 percent in the
Northeast and dropped 13.1 percent in the South. Starts rose
strongly in the West and Midwest.
Housing starts for the volatile multi-family segment
fell 5.4 percent to a 420,000-unit pace. The multi-family
segment of the market has been buoyed by strong demand for
rental accommodation as some Americans shun homeownership in the
aftermath of the housing market collapse.
Momentum could slow with rents appearing close to peaking
and rental vacancy rates bottoming.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)