The numbers: Construction on new U.S. homes fell a seasonally adjusted 8.1% in September to 1.44 million, the Commerce Department said Wednesday.
The drop in construction on homes reverses a sharp increase in August, when housing starts rose 13.7%.
Economics polled by the Wall Street Journal expected housing starts to fall to a 1.47 million rate from June’s initial estimate of 1.58 million.
On a year-on-year basis, housing starts are down 7.7% in September.
Building permits for new homes rose 1.4% to 1.56 million in September. Economists had expected building permits to inch up to a 1.54 million rate from August’s initial estimate of 1.52 million.
Key details: Starts of new holes fell 4.7% in September, while apartment starts fell 13.1%.
Permits for new homes fell 3.1% in September while apartment construction starts rose 8.2%.
Big picture: The housing market is weakening rapidly, exacerbated by affordability concerns. Analysts are hoping that Mortgage applications continue to fall last week and mortgage rates continued to climb.
What are they saying? “Elevated input costs and shortages coupled with weakening demand will continue to be constraints going forward,” said Rubella Farooqi, chief U.S. economist at High Frequency Economics.
Economists at Contingent Macro said: “While strength in multi-family provided a modest offset to some of the initial weakness, all signs suggest housing will be a considerable drag on growth late in the third quarter and into the fourth quarter.”
Market reaction: Stocks
were set to open lower on Wednesday while the 10-year Treasury note
rose to 4.1%.