Housing Starts Pause in August But Still Up From Last Year
Single-family and multifamily housing starts posted declines in August after several months of gains.
August single-family starts were down 6 percent from the July pace, falling back to a seasonally adjusted annual rate of 722,000. However, on a year-to-date basis, single-family construction is continuing at a rate that is 9 percent higher than this time in 2015.
Part of the August decline in single-family starts was weather-related, particularly due to flooding issues in Louisiana. The South reported a 13 percent decline in single-family starts on a monthly basis, and production was 14 percent lower than the August 2015 pace. We should see strengthening single-family construction in the South in the months ahead.
Multifamily starts also registered a drop, falling 5.4 percent (2+ unit production). On a year-to-date basis, multifamily construction is roughly flat compared to this time last year, as the rental apartment market seeks a balance between supply and demand.
In terms of current construction activity, a total of 428,000 single-family units were under construction in August. This total has been roughly unchanged since February, although it is 9 percent higher than August of 2015. A total of 610,000 multifamily units (units in 2+ unit properties) was under construction in August, 16 percent higher than August of 2015.
Currently, 59 percent of all units under construction nationwide are multifamily. In contrast, during the 2000 to 2003 period, a useful market benchmark, just slightly more than 30 percent of units under construction were multifamily.
Permit activity, combined with rising home builder market confidence, suggest gains ahead for starts. Single-family permits were up almost 4 percent in August from the July level. Single-family permits have grown by more than 8 percent on a year-to-date basis. Multifamily activity continues to level off, with permits down 8 percent in August and down 15 percent on a year-to-date basis.
Overall, housing starts were down almost 6 percent in August as the market took a pause after gains in June and July. NAHB expects additional growth in the single-family market, given tight home inventories and solid builder confidence.
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This article is a post from NAHB’s Eye on Housing blog.