According to estimates from the U.S. Housing and Urban Development and Commerce Department, single-family starts edged up in September, consistent with recent gains for the NAHB/Wells Fargo Housing Market Index (HMI). However, the headline measure of total housing starts was down 9.4% for the month due to a large decline in the volatile multifamily sector.
Single-family starts increased 0.3% to a 918,000 seasonally adjusted annual pace in September. Multifamily starts declined 28.2% to a 338,000 annualized rate after a strong reading of 471,000 in August.
On a year-to-date basis, single-family starts are 1.8% lower than the first nine months of 2018. NAHB’s forecast, and the forward-looking HMI suggest that future data will show slight monthly gains due to recent declines in mortgage interest rates. Indeed, single-family permits have been increasing since April, and single-family starts have been rising since May as the home construction rebound continues. We expect additional single-family growth, as areas beyond the exurbs respond to for-sale housing demand and ongoing healthy labor markets.
On a regional and year-to-date basis, single-family starts are down 9.1% in the Northeast, 8.6% in the West, 5.4% in the Midwest and up 3.4% in the South – the only region with net gains.
As of September 2019, there were 524,000 single-family homes under construction. September saw the first gain for this number since January, and it is roughly flat from a year ago. There are currently 633,000 apartments under construction, a post-Great Recession high. The cumulative impact of the rebound in home construction is seen in the graph below.