US housing starts jump in August, but permits decline

Homebuilding in the States picked-up substantially last month, but a key forward-looking indicator fell short of analysts' forecasts.

According to the Department of Commerce, US housing starts shot up by 9.2% month-on-month in August to reach an annualised clip of 1.282m, led by activity in the West and Midwest.

That was well ahead of the 1.225m pace which economists had penciled-in.

Nevertheless, starts for single-family homes were up by a more tame 1.9% month-on-month to 876,000.

The August print also came alongside an upwards revision to July's print from 1.168m to 1.172m.

Housing permits on the other hand, which tend to lead the data on starts, declined by 5.7% versus July to reach 1.229m (consensus: 1.30m).

"We expected a decline, given the softening in new home sales, but the 6.1% drop in single-family starts was bigger than we forecast and it now suggests that single-family permits are on course to drop to a 12-month low in September, even without the hit from Hurricane Florence," said Ian Shepherdson at Pantheon Macroeconomics.

"In short, these data are consistent with our view that the trend in housing market activity has peaked, despite the surge in August headline starts."