The geographic area that bore the brunt of Katrina normally accounts for a minor share of U.S. housing market activity. Indeed, the Commerce Department reported that, “The metropolitan areas affected most by the hurricane accounted for about 1.1% of U.S. total permit authorizations in 2004 and about 2.4% of the permit activity in the South region.”
Although Katrina put only a small, immediate dent in current U.S. housing market activity, the damage to the existing housing stock was immense and the implications for future production are profound.
The Red Cross disaster assessment (as of Sept. 18) indicated that 416,894 housing units were destroyed (uninhabitable and beyond repair). In addition, nearly 85,000 units suffered “major” damage and 130,000 incurred “minor” damage. Louisiana was hit the hardest, with 348,000 units destroyed and another 43,000 damaged.
The Red Cross estimates that most (99%) of the destroyed dwelling units were single-family detached homes, with only small numbers of apartments and manufactured homes removed from the housing stock. This distribution is questionable, in view of available information on the housing stock before Katrina. In any case, the Red Cross disaster assessments for Katrina are a work in process. And, of course, Hurricane Rita is now storming through the Gulf of Mexico.