Housing starts slip in August

Housing starts slipped a notch in August, but single-family home starts continue to move forward, according to the latest New Residential Construction report from the Department of Commerce.

Total private-owned housing starts fell 5.1% in August to a seasonally adjusted annual rate of 1.416 million compared to the revised July estimate of 1.492 million. 

The latest total starts number is 2.8% above the August 2019 rate of 1.377 million, however. And single-family starts are up 12.1% on a year-over-year basis.

Single-family starts increased 4.1% to 1.021 million above the revised July rate of 981,000. This is the highest pace for single-family starts since February. Multifamily starts fell by a double-digit percentage, dropping 22.7% to a 395,000 pace.

“Consistent with surging builder confidence, single-family starts rose in August to meet rising buyer traffic,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). 

Yesterday, the NAHB reported that builder confidence had reached record levels in September. But Fowke notes that builders continue to face concerns in regard to rising lumber prices and supply chain shortages of building materials.

Despite the issues material costs and supply shortages, housing demand remains strong.

“Total housing starts were down in August on a decline for multifamily construction, with multifamily 5+ unit permits now down 8.3% on a year-to-date basis,” said NAHB Chief Economist Robert Dietz. “But low interest rates and solid demand are spurring single-family construction growth, which makes up the bulk of the housing market. Single-family permits continue to rise as well, and are now up almost 7% on a year-to-date basis.”

Single-family permits continue to gain ground and increased 6% to 1.036 million in comparison to the revised July rate of 977,000. Total housing permits slipped 0.9% to 1.470 million compared to the July revised rate of 1.483 million. This is also about 0.1% below the August 2019 rate of 1.471 million.

Here’s how housing starts break down by region:

• In the Northeast, total housing starts fell 33.1% in August as single-family starts declined 21.9%. On a year-over-year basis, total starts plummeted 47% as single-family starts dropped 6.6%.
• In the Midwest, total housing starts rose 28.4% as single-family starts increased 20% in August. Year-over-year, total starts jumped 40.5% with single-family starts increasing 23.7%.
• In the South, total housing starts declined 17.7% while single-family starts slipped 3.8% for August. Total starts are down 2.6% on a year-over-year basis but single-family starts are up 9.6%.
• In the West, total starts ascended 19.5% with single-family starts growing 23.4%. Total starts increased 19.9% with single-family starts rising 15.8% on a year-over-year basis.

The full report Monthly New Residential Construction report for August 2020 is available here.