Hurricane Rita has been downgraded to a tropical storm following hours battering the states of Texas and Louisiana causing widespread damage and power cuts.
The US National Hurricane Centre said the storm now has maximum winds of 104km/h but is still expected to cause heavy rain over the next few days.
Earlier wind speeds of up to 200km/h were recorded and towns and cities have been lashed by torrential rain.
Officials across the region said the storm had toppled trees, destroyed buildings and sparked numerous fires.
The estimated cost of the damage is put at more than €6.5 billion.
Up to 500,000 households and businesses have been left without electricity as many sub-stations exploded. It is feared that 16,000 people could be left homeless.
At least two million evacuated from Houston - the fourth largest city in the United States. While the city has avoided a direct hit from Rita, officials are advising residents not to return just yet.
The US National Hurricane Centre says the strongest winds made landfall this morning, and the storm's eye followed about 90 minutes later.
The towns of Sabine Pass in Texas and Cameron in Louisiana took the initial fury of the hurricane.
Catastrophe warning
Earlier, officials in Texas warned of catastrophe as downpours and wind from Rita's edges pounded hundreds of kilometres of the coastline.
Officials in the Texas oil-refining cities of Port Arthur and Beaumont feared heavy flooding.
Nearly all oil production in the Gulf of Mexico has been halted.
In New Orleans, fast-rising water from Rita's outer edges spilled over a freshly patched levee to flood neighbourhoods already deserted and devastated by Hurricane Katrina last month.
Surging waters from the hurricane poured eight feet of water into a New Orleans neighborhood as engineers tried to patch the weakened levees.
Hurricane Katrina devastated southeastern Louisiana and Mississippi, killing at least 1,069 people.
