Single-Family Starts Flat in September


Total housing starts decreased 1.6% in September, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Single-family starts were flat for the month, while overall multifamily starts declined in August.

The August total starts reading of 1.56 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts came in at a 1.08 million seasonally adjusted annual rate. Single-family housing starts are up 20.5% on a year-to-date basis; however, the numbers are distorted by the weak readings of the Summer of 2020.

Single-family builder confidence increased four points to a level 80 on some easing for material prices, according to the NAHB/Wells Fargo Housing Market Index (HMI). After peaking at a level of 90 last November, builders report growing concerns over increasing lumber and other construction costs, as well as delays in obtaining building materials. The NAHB forecast calls for growing labor shortages as the overall unemployment rate trends lower in the quarters ahead.

While the single-family sector has been cooling off the unsustainable seasonally adjusted pace of last Winter, recent forward-looking readings, including the HMI, suggest that trend is now stabilizing. For example, single-family permits have been stable since June. It is worth noting however that the number of single-family homes permitted but not started construction continues to be elevated, up 38.5% year-over-year to 144,000 single-family homes, a clear sign of ongoing supply-chain issues. However, this count appears to have peaked in June at 148,000 and is now declining slowly.

The multifamily sector, which includes for-rent apartment buildings and condos, recorded a 475,000 annual rate for 2+ unit construction. After posting a slight decline in 2020, 5+ unit production is up 17.6% on a year-to-date basis. However, the “missing middle,” 2 to 4 unit production has posted on slight gains (2.7% gain on a year-to-date basis).

On a regional and year-to-date basis, combined single-family and multifamily starts are 29% higher in the Northeast, 12% higher in the Midwest, 19% higher in the South and 23% higher in the West.

As an indicator of the economic impact of housing, there are now 712,000 single-family homes under construction. This is 31% higher than a year ago. There are currently 714,000 apartments under construction, up 6% from a year ago. Total housing units now under construction (single-family and multifamily combined) is 17% higher than a year ago.

Overall permits declined almost 8% in September to a 1.59 million unit annualized rate. Single-family permits declined 0.9% to a 1.04 million unit rate. Multifamily permits declined 18% to a 548,000 pace.

Looking at regional permit data on a year-to-date basis, permits are 20% higher in the Northeast, 20% higher in the Midwest, 23% higher in the South and 25% higher in the West.

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