Housing starts fell 2 percent in September to an annual rate of 1.576 million from August's 1.616 million, the Commerce Department said Wednesday. Meanwhile, new housing permits fell 5 percent to an annual rate of 1.545 million.
Both starts and permits are up 5 percent from a year earlier.
Wall Street economists were expecting starts to dip to a 1.61 million rate and permits to fall to a 1.59 million rate.
The weakness in new construction was concentrated in the South (down 9 percent) and the Northeast (down 4 percent). Hurricanes and other bad weather likely contributed to the drop in the South. Starts rose 3 percent in the Midwest and 6 percent in the West.
If the dropoff in activity continues, it could push U.S. economic activity even lower. Housing has been one of the stalwarts of the most recent phase of the economic expansion. Low unemployment, tremendous wealth accumulation and low interest rates have spurred a binge in housing construction not seen in a decade.
So far in 1998, 1.219 million units have been started, 9 percent more than at this time last year.
Most of the decline in September came in multifamily dwellings, especially smaller buildings of 2 to 4 units, which plunged 40 percent to their lowest level in more than two years. Starts of larger buildings fell 4 percent.
Starts of new single-family homes dropped 1 percent to an annual rate of 1.246 million in September.
Written by By Rex Nutting