Multi-family leads rise in August housing starts
Despite material shortages and labor issues, residential construction moved forward in August with multi-family activity taking the lead.
Housing starts increased 3.9% to a seasonally adjusted rate of 1.615 million from the revised July estimate of 1.554 million, according to the latest Monthly Residential Construction Report released this morning by the U.S. Census Bureau and the Department of Housing and Urban Development.
The latest figure is also 17.4% above the August 2020 rate of 1.376 million.
But single-family starts fell 2.8% during the month to a rate of 1.076 million compared to the July revised rate of 1.107 million.
In contrast, multi-family starts increased by 20.6% while multi-family permits rose 15.8% for the month.
“Single-family construction is normalizing at more sustainable levels after an increase in building material pricing,” said NAHB Chairman Chuck Fowke. “Demand remains strong, but the market is facing increasing housing affordability issues after a run-up in new and existing home prices. Multi-family construction increased in August, with NAHB expecting a solid gain for apartment construction in 2021 after a slight decline last year.”
Residential building permits in August rose 6% to a seasonally adjusted annual rate of 1.728 million from the revised July rate of 1.63 million. Permits are also up 13.5% in comparison to the August 2020 rate of 1.522 million.
Single-family permits inched upward by 0.6% to a rate of 1.054 million from the revised July rate of 1.048 million.
"Total housing starts and housing permits made decent gains in August compared to the month prior, but the focus was on multi-family units," said Lawrence Yun, chief economist of the National Association of Realtors.
The latest residential construction report follows yesterday's news that Builder confidence increased slightly, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). After a three-month decline, builder sentiment in the market for newly-built single-family homes edged up one point to 76 in September.
“More inventory is coming for a market that continues to face a housing deficit,” said NAHB Chief Economist Robert Dietz. “The number of single-family homes under construction in August — 702,000 — is the highest since the Great Recession and is 32.7% higher than a year ago. While some building materials, like lumber, have seen easing prices, delivery delays and a lack of skilled labor and building lots continue to hold the market back.”
Here’s how residential starts and permits performed by region in August:
- In the Northeast, total starts jumped 167.2% above the previous month as single-family starts surged by 52.4%. Total permits climbed 18.5% as single-family permits increased 15.5%.
- In the Midwest, overall starts increased 11.4% but single-family starts fell by 12.5% compared to the prior month. Total permits inched upward by 0.9% as single-family permits held steady.
- In the South, combined starts edged upward 1.4% as single-family starts moved ahead 2.5%. Total permits ascended by 6.7% but single-family starts fell 2.5%.
- In the West, total starts plummeted 21.1% as single-family starts tumbled downward by 20.5%. Overall permits increased 3.5% with single-family permits rising 5.5%.
Click here to read the full Monthly New Residential Construction Report for August 2021.
