Harvey weighs on new US homebuilding in August

New US homebuilding slowed in August for the second straight month, driven down by Hurricane Harvey and a continuing drop in apartment construction, according to government data released Tuesday.

The decline brought the pace of construction to its slowest pace in three months. The rate of building has now fallen in six of the first eight months so far in 2017.

However, construction in the important single-family segment saw a healthy gain.

And in a sign that building could recover soon, building permits for construction in the pipeline hit the highest level since January, the Commerce Department report said.

Total housing starts fell 0.8 percent in August to a seasonally adjusted rate of 1.18 million units, and there was a big upward revision in housing starts in July. Analysts had instead been expecting twice a rate of 1.17 million.

Despite the decline last month, new construction was still 1.4 percent above August of last year.

Hurricane Harvey, which made landfall in Southeast Texas on August 26, slowed construction activity for the last week of the month in that region, the Commerce Department said.

Disaster-affected counties in Texas accounted for about four percent of all US housing permits last year.

Building permits rose by 5.7 percent for the month to an annual rate of 1.3 million, surpassing an analyst forecast for 1.23 million.

A sharp 22.8 percent increase in permits for multi-unit dwellings drove the monthly gains, although the figure has shown a lot of volatility.

Analysts say the effects of Hurricane Harvey should linger, with some builders in Texas unable to break ground until inundated foundations have dried out enough to allow construction.

"We expect activity to strengthen once the hurricane distortions are over," Ian Shepherdson of Pantheon Macroeconomics said in a research note.

But the housing sector likely will weigh on GDP growth in September, slowing the economy in the third quarter, he said.

With the US economy in recovery for the better part of a decade, economists say housing construction has failed to keep pace with strong demand, due to a shortage of workers and rising input costs.

source: AFP