U.S. housing starts drop below expectations in September

Housing starts in the U.S. dropped in September, coming in below consensus expectations. Housing starts fell 4.7 percent sequentially to 1127k units in the month, as compared with consensus expectations of 1175k. Most of the miss was due to the unexpected sharp decline in the multi-family starts that fell 5.1 percent to 298k.

But this segment is known to be a volatile category and a rebound to above 300k levels is expected in the months ahead, noted Barclays in a research report. Single-family starts dropped 4.6 percent sequentially to 829k.

Region wise, housing starts dropped in regions barring the West, where they rose 15.7 percent sequentially. In the meantime, the data for August was upwardly revised with total housing starts now showing a decline of 0.2 percent on the month as compared with the earlier estimate of a decline of 0.8 percent sequentially.

The weaker-than-expected housing starts data suggest lower private residential construction spending in the third quarter. However, the overall residential investment tracker was downwardly revised only slightly, leaving the third quarter GDP tracking estimate unchanged at 2.3 percent, after rounding, added Barclays.

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