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After reporting a substantial increase in new residential construction in the previous month, the Commerce Department released a report on Thursday showing a sharp pullback in U.S. housing starts in the month of September.
The Commerce Department said housing starts plunged by 9.4 percent to an annual rate of 1.256 million in September after soaring by 15.1 percent to a revised 1.386 million in August.
Economists had expected housing starts to drop by 3.2 percent to an annual rate of 1.320 million from the 1.364 million originally reported for the previous month.
With the much bigger than expected decrease, housing starts pulled back well off the twelve-year high set in August.
Multi-family starts led the way lower, plummeting by 28.2 percent to a rate of 338,000 in September after spiking by 41.4 percent to a rate of 471,000 in August.
Meanwhile, the report said single-family starts rose by 0.3 percent to a rate of 918,000 after jumping by 5.1 percent to a rate of 915,000 in the previous month.
The report said building permits also slumped by 2.7 percent to an annual rate of 1.387 million in September after surging up by 8.2 percent to a revised 1.425 million in August.
Building permits, an indicator of future housing demand, had been expected to tumble by 4.9 percent to a rate of 1.350 million from the 1.419 million originally reported for the previous month.
Multi-family permits tumbled by 8.2 percent to a rate of 505,000, more than offsetting a 0.8 percent increase in single-family permits to a rate of 882,000.
On Wednesday, the National Association of Home Builders released a separate report showing homebuilder confidence unexpectedly climbed to its highest level in well over a year in the month of October.
The report said the NAHB/Wells Fargo Housing Market Index jumped to 71 in October after inching up to 68 in September. Economists had expected the index to come in unchanged from the previous month.
With the unexpected increase, the housing market index rose for the fourth straight month and reached its highest level since hitting a matching reading in February of 2018.