Housing Starts Pause in August

Single-family and multifamily housing starts posted declines in August after several months of gains.

August single-family starts were down 6% 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% higher than this time in 2015.

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Part of the August decline in single-family starts was weather-related, particularly due to flooding issues in Louisiana. The South reported a 13% decline in single-family starts on a monthly basis, and production was 14% 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% (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.

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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% higher than August of 2015. A total of 610,000 multifamily units (units in 2+ unit properties) was under construction in August, 16% higher than August of 2015.

Currently, 59% 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% 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% in August from the July level. Single-family permits have grown by more than 8% on a year-to-date basis. Multifamily activity continues to level off, with permits down 8% in August and down 15% on a year-to-date basis.

Overall, housing starts were down almost 6% 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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