Housing starts rose 0.3% to an annual rate of 610,000 in September. In the third quarter, housing starts declined at an annual rate of 8.2% after a 9.4% drop in the second quarter. Starts of single-family units moved up 4.4% in September, but the third quarter average fell 36.9% vs. a 23.3% drop in the second quarter. Permit extensions for single-family units rose a paltry 0.5% to an annual rate of 405,000 in September, implying a possible decline in construction of new homes in October.

In the third quarter, completions of homes fell at an annual rate of 62.2% vs. a 94.8% jump in the second quarter (see chart 2). Residential investment expenditures posted a strong gain in the second quarter. Based on the information from today's housing starts and completions report, a decline in real residential investment expenditures is nearly certain in the third quarter.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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