The Commerce Department said on Wednesday housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January.
Financial markets had expected starts to rise to 600,000 units. September’s housing starts were revised upwards to a 592,000 unit rate from the previously reported 590,000 units.
“The trickle-down effect of the housing number is going to be amazing,” said Dan Cook, senior market analyst at IG Markets, Chicago. “It’s likely that more construction crews will get cut after this, and the supplier who supply those crews will be hurt as well. This is not good news at all.”
Groundbreaking for single-family homes fell 6.8 percent last month to an annual rate of 476,000 units, the lowest since May. Starts for the volatile multifamily segment tumbled 34.6 percent to a 53,000 annual pace, extending the previous month’s slide.
Compared to October last year, housing starts dropped 30.7 percent. The latest data will be a blow to the housing market, which had shown signs of stabilization after a three-year slump. Residential investment contributed to economic growth in the July-September period for the first time since 2005.