U.S. homebuilding saw a decline greater than expected in September as construction activity in the South declined by the most in several years. The large decline could be due, at least in part, to the effects of Hurricane Florence.
According to Bloomberg.com, residential housing starts declined by 5.3% to 1.201m annualized and the previous month’s figures were revised lower to 1.268m. Multifamily housing starts declined by 15.2% while single family starts dropped by .9%.
Housing permits (which can act as a good proxy for future construction) declined by .6% to 1.241m.
Is This Trouble for the Housing Market?
Although the report was a bit of a disappointment, it does not necessarily mean trouble for the housing market. Any effects on the sector from Hurricane Florence are likely to be temporary, and the biggest declines seen were in multifamily starts which tend to be volatile anyway. On the plus side, permits for single family homes rose by 2.9 percent last month. This rise could be indicative of a strong pipeline of projects for the foreseeable future.
The housing market has been a weak point in a robust economy. A steep rise in mortgage rates along with higher housing prices has likely been the primary factors weighing on purchases as housing becomes increasingly unaffordable.
Little Impact on Gold
The gold market did not have much of a reaction to the latest housing data and appears to be in consolidation mode today even as stocks come under significant pressure.
Gold Price Chart
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