However strong third-quarter GDP may prove, it likely won't be getting any lift from residential investment. Housing starts in September came in on the low side of expectations, down 5.3 percent to a 1.201 million annualized rate with completions very weak, down 4.1 percent to a 1.162 million rate that's the lowest since November last year. Hurricane Florence certainly didn't help the South where starts fell 13.7 percent but the Midwest, which was not affected by the hurricane, saw starts fall 14.0 percent in the month.
Building permits, which should be less affected by weather, fell 0.6 percent in September to 1.241 million that is well below expectations and, like completions, is the weakest rate since November. Permits were pulled down by a sharp 7.6 percent drop for multi-units with single-family permits up a solid 2.9 percent. But even here, the year-on-year rates show the weakness, up only 2.4 percent for single-family permits, down 7.8 percent for multi-units with total permits down 1.0 percent.
Looking at quarter-to-quarter comparisons, starts averaged 1.218 million which is down from 1.261 million in the second quarter in what points to yet another quarter of trouble for residential investment -- which is the weak link in the 2018 economy. Hurricane effects are a wildcard for housing data both for September and also for October when Michael hit the Florida panhandle but the ultimate impact on the nation's statistics, judging by today's results, may prove elusive.
A slowing in starts and reacceleration for permits are September's expectations, at a consensus 1.216 million for the former, vs 1.282 million in August, and 1.272 million for the latter vs 1.249 million (revised from an initial August reading of 1.229 million). Hurricane Florence likely slowed starts in the Southeast during September. In August, starts for multi-family units, which had been weak, surged though permits for multi-family units fell. Permits for single-family homes also fell in what proved to be a widely mixed August report.