NAHB warns of softening housing market ahead
While total housing starts increased 9.2% in August to a seasonally adjusted annual rate of 1.28 million units, a slowdown could be on the horizon due to rising costs and affordability issues.
The August reading of 1.28 million, according to the U.S. Department of Housing and Urban Development and the Commerce Department, is the number of housing units builders would start if they maintained this pace for the next 12 months.
Within this overall number, single-family starts increased 1.9% to 876,000 units. The multifamily sector, including apartment buildings and condos, jumped 29.3% to a total of 408,000.
But the National Association of Home Builders said the housing picture might not be that bright in the coming months.
“Builders remain largely confident because the economy is solid and demographics point to continued demand,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, affordability continues to be a concern for both builders and buyers.”
Although housing production rose, overall permits – an indicator of future housing production – fell 5.7% to 1.23 million units in August. Single-family permits fell 6.1% to 820,000 units and multifamily permits dropped 4.9% to 409,000 units.
“Although we saw an increase in starts in August, we are likely to see softening in the market in the months ahead,” said NAHB Chief Economist Robert Dietz. “Affordability is a particular concern because of home price gains, due in part to the high regulatory burden on new home construction. Increasing costs for building materials prompted partially by recently imposed tariffs on a wide range of products are also a concern. Moreover, interest rates are continuing their gradual upward climb.”
Regionally, the West led the nation with a 19.1% increase in combined single-family and multifamily housing starts. Unchanged in the Northeast, starts increased 9.1% in the Midwest and 6.5% in the South.
Led by a 19.2% decline in the Northeast, permits decreased in every region. They fell 1.7% in the Midwest, 2.9% in the South and 8.4% in the West.
The August reading of 1.28 million, according to the U.S. Department of Housing and Urban Development and the Commerce Department, is the number of housing units builders would start if they maintained this pace for the next 12 months.
Within this overall number, single-family starts increased 1.9% to 876,000 units. The multifamily sector, including apartment buildings and condos, jumped 29.3% to a total of 408,000.
But the National Association of Home Builders said the housing picture might not be that bright in the coming months.
“Builders remain largely confident because the economy is solid and demographics point to continued demand,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, affordability continues to be a concern for both builders and buyers.”
Although housing production rose, overall permits – an indicator of future housing production – fell 5.7% to 1.23 million units in August. Single-family permits fell 6.1% to 820,000 units and multifamily permits dropped 4.9% to 409,000 units.
“Although we saw an increase in starts in August, we are likely to see softening in the market in the months ahead,” said NAHB Chief Economist Robert Dietz. “Affordability is a particular concern because of home price gains, due in part to the high regulatory burden on new home construction. Increasing costs for building materials prompted partially by recently imposed tariffs on a wide range of products are also a concern. Moreover, interest rates are continuing their gradual upward climb.”
Regionally, the West led the nation with a 19.1% increase in combined single-family and multifamily housing starts. Unchanged in the Northeast, starts increased 9.1% in the Midwest and 6.5% in the South.
Led by a 19.2% decline in the Northeast, permits decreased in every region. They fell 1.7% in the Midwest, 2.9% in the South and 8.4% in the West.