Washington, October 19—Housing starts fell much more than expected during September, but permits for future building posted a surprise increase.
The Commerce Department said housing starts decreased 6.0% to a seasonally adjusted 1.898 million annual rate. Economists polled by Dow Jones Newswires and CNBC had forecast housing starts would drop by 2.8% to a 1.945 million annual rate.
Building permits, seen as an indicator of future activity in the housing sector, increased by 1.8% to a 2.005 million annual rate. That too was a surprise to forecasters, who expected a 1.5% dip.
Some analysts see housing construction at a cyclical peak and have been forecasting its decline for some time. But starts and sales have run high this year. Mortgage rates have been relatively low, attracting new buyers into the market. Last month, the average 30-year loan held below the 6% mark after drifting lower in mid-summer, according to Freddie Mac.
Single-family housing starts took a dive, falling by 8.2% in September. Multi-family starts -- that is, apartment building construction -- jumped by 20.1%.
Regionally, housing starts fell 26.9% in the Northeast, 4.6% in the Midwest, 1.0% in the South, and 7.9% in the West. The drop in the Northeast was the largest since starts tumbled 29.1% in May 2001.
Nationwide, an estimated 163,000 houses were actually started, based on unseasonally adjusted figures. An estimated 173,500 building permits were issued in September, also based on unadjusted figures.
