Steel Markets

Hurricanes Impact Southern Housing Statistics

September 19, 2017

New residential building permits surged 5.7 percent month-over-month in August to a seasonally adjusted annual rate of 1.3 million, according to the latest report from the Commerce Department. Single-family authorizations dipped 1.5 percent, but permits for housing of five units or more jumped 22.8 percent. Gains in August were concentrated in the Midwest and West, along with a 3.7 percent increase in the South. Permit authorizations fell 13.0 percent in the Northeast.

Housing starts fell for the second month, slipping 0.8 percent in August to a seasonally adjusted annual rate of 1,180,000. A gain of 1.6 percent for single-family housing was offset by a drop of 5.8 percent for housing of five units or more. Starts were up 22.0 percent in the Midwest compared to July and 4.0 percent in the West. The Northeast and South saw declines of 8.7 percent and 7.9 percent, respectively.

The hurricanes in the South affected Commerce’s ability to collect housing data during August. Counties included in the FEMA disaster declarations in Texas and Florida accounted for about 13 percent of 2016 U.S. permit authorizations and 26 percent of authorizations in the South region. Areas that were unable to report in August were assumed by Commerce to have no permits issued, but responses were “not significantly impacted,” said Commerce. Information on starts and completion status is collected at the end of the month, and only about 60 percent of the data was collected in FEMA-affected counties last month compared to the normal 95 percent sample rate.

The Florida counties in the disaster area account for about 9 percent of U.S. total permit authorizations and 18 percent of permits authorized in the South. The September data is expected to reflect the impact of Hurricane Irma in Florida.

As the recovery process proceeds in the South, homes that are completely rebuilt will count as new construction. Those that are repaired will not be part of Commerce permit statistics.

The National Association of Home Builders’ builder confidence reading dropped three points to 64 in September. The hurricanes intensified concerns about labor availability and costs of building materials, said NAHB Chairman Granger MacDonald. “Once the rebuilding process is under way, I expect builder confidence will return to the high levels we saw this spring,” he said.