U.S. housing starts likely to have slowed slightly in September, residential construction to boost growth in Q3

U.S. housing starts data for the month of September is set to release tomorrow. The data is likely to grab market attention. After dragging on GDP growth for six straight quarters, residential construction is finally poised to stimulate growth in the third quarter, said Wells Fargo in a research report.

In August, total housing starts rose 12.3 percent to a 1.36 million-unit pace, the highest since June 2007. Optimism is also higher. The National Association of Homebuilders (NAHB) Housing Market Index rose to 68 in September, which is an 11-month high. The rise was because of a rebound in builders’ assessments of current sales, stimulated by the sharp fall in mortgage rates and the tight labor market.

“Stronger optimism should lead to increased construction, but a surge is unlikely as builders remain cautious. Trade policy uncertainty and stock market volatility are likely holding back homebuilders, who are wary of a sudden pullback in demand. Still, the stronger sales pace and improving confidence should feed through to stronger construction later this year”, added Wells Fargo.