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Housing starts fall to 12-month low

Posted by The Aramco Group on Thu, Oct 19, 2017 @ 14:10 PM

Homebuilding in the U.S. dropped to a one-year low in September, a setback in 2017's growth in housing starts. Devastation left behind by Hurricanes Harvey and Irma are being blamed for the fallout as builders were unable to break ground on many new properties. The U.S. Census Bureau and the Department of Housing and Urban Development shows that housing starts decreased 4.7 percent to a seasonally adjusted annual rate of 1.127 million units last month. This is the lowest level since September 2016.

Residential construction has been stagnant for most of this year due to labor shortages and increased building material costs. Newly issued housing permits, a precursor to housing starts activity, declined as well. September's permits fell by 4.5 percent and are down 4.3 percent from last year.

Predictions for next month's figures are also far from positive as wildfires which are currently ravaging parts of California are expected to worsen labor shortages and drive up costs. The slowdown in new home construction will have a lasting impact on the ongoing housing shortage. Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent while 15-year rates are near 3.25 percent.

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