US Home Starts Less Than Expected

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The number of housing starts in the U.S. rose 0.9 percent in August, slower than expected.

Housing starts rose to an annually adjusted rate of 891,000 single family homes in August, compared to an adjusted rate of 883,000 in July, according to U.S. Census Bureau and the Department of Housing and Urban Development data released today.

The starts were 19 percent above August 2012, but the increase was less than volume forecast. Economists had expected groundbreaking to rise to a 917,000-unit rate last month, Reuters reports.

But the number of single-family home starts in August was 7 percent higher than July, rising to an annual rate of 628,000 units, the highest rate since February. But the overall rate was dragged lower by a slowdown in multi-family starts, which analysts attributed to the rise in interest rates making builders hesitant to start new projects.

Meanwhile the authorization of building permits fell 3.8 percent from July to a seasonally adjusted rate of 918,000, 11 percent higher than the same month in 2012.

Housing starts do "seem to have lost momentum, but we see it as a temporary slowdown," David Sloan, senior economist at 4Cast Ltd. in New York, told Bloomberg. "Higher rates are a restraint on the housing recovery, but won't derail it."

Data released today by the American Institute of Architects showed an "acceleration in the growth of design activity nationally." The AIA's Index, considered a leading indicator of the construction market, rose to 53.8, up from 52.7 in July. Any score over 50 indicates an increase in billing, the association said.