The pace of housing starts posted a small decline in August, but permits and builder confidence suggest ongoing, modest growth for the rest of the year.
After a downward revision for July, total housing starts declined 3% to a seasonally adjusted annual rate of 1.126 million, as detailed in the joint release from the Census Bureau and HUD. The declines were evenly distributed among the single-family and multifamily market segments, with both off 3% for the month and recording starts rates of 739,000 and 387,000 units respectively.
Year-over-year, single-family starts were up 14.9% and multifamily gained 19.8%.
Current trends continue to be consistent with NAHB’s forecast of growth for single-family construction. The three-month moving average for single-family starts grew to a rate of 729,000, marking the third consecutive quarter above a 700,000 rate. Single-family permits expanded 2.8% in August. Along with gains for the NAHB/Wells Fargo Housing Market Index measure of single-family builder confidence, these trends point to gathering strength for single-family building for the rest of the year.
Multifamily starts continued to cool from June’s exceptional pace of 524,000. Nonetheless, at a three-month moving average of 437,000 for August, the current month’s estimates marked the third straight month at an average of 400,000 or higher. The pace of multifamily permits grew by 4.7% in August, suggesting the recent strength for apartment development will continue.
Regionally, total housing starts experienced a 33.7% decline for the Northeast, due to declines for both single-family and multifamily construction. Declines were also seen for total starts in the Midwest and the South, with single-family declines of 18% in the West and 10% in the Midwest. Offsetting these regional changes, there was strength in the larger market of the South: A 7% for total starts and 9% gain for single-family.
In addition to growth in permits, the momentum for the housing recovery can be seen by the Census/HUD measure of units currently under construction. After slowing at the start of the year, the number of single-family homes under construction has been increasing since February and now stands at 394,000 units.
The number of multifamily units has been increasing since August of 2014. As of August, there were 526,000 multifamily units under construction. This level marks more than an 18% year-over-year gain.