Investment in homebuilding contracted at a 7.3 percent annualized rate in the second quarter, the steepest drop in nearly seven years. As a result, housing subtracted three-tenths of a percentage point from gross domestic product in the April-June quarter.
While economists expect housing starts to rebound in the fourth quarter, they caution that rebuilding in the areas devastated by the hurricanes could pull scarce labor away from other parts of the country and limit gains. The reconstruction effort is also pushing up prices of building materials.
Single-family homebuilding, which accounts for the largest share of the housing market, fell 4.6 percent to a rate of 829,000 units in September. Single-family starts rose in the Northeast, Midwest and West.
Groundbreaking on single-family housing projects has slowed since vaulting to near a 9-1/2-year high in February.
Last month, starts for the volatile multi-family housing segment fell 5.1 percent to a rate of 298,000 units. Single-family home permits rose 2.4 percent, while permits for the construction of multi-family homes dropped 16.1 percent