U.S. home building fell to a one-year low in September as Hurricanes Harvey and Irma disrupted the construction of single-family homes in the South, suggesting housing probably remained a drag on economic growth in the third quarter.
The report on Wednesday from the Commerce Department also showed a decline in building permits, raising concerns that the housing market recovery was stalling. Home building and sales are well below their peaks before the housing bubble burst in 2006.
"Residential construction should be a hefty drag on third-quarter GDP growth," said Michael Gregory, deputy chief economist at BMO Capital Markets in Toronto. "Housing activity has shifted from leading the economic expansion to now just following it, at best."
Housing starts decreased 4.7 percent to a seasonally adjusted annual rate of 1.127 million units last month, the Commerce Department said. That was the lowest level since September 2016 and marked the third monthly decline in starts.
Groundbreaking tumbled 9.3 percent in the South to the lowest level since October 2015, with single-family home building in the region plunging 15.3 percent to more than a one-year low. The South, which was pummeled by Harvey and Irma, accounts for almost half of the nation's home building.