Single-Family Starts Show Month-Over-Month Improvement
August saw the strongest gain in construction of single-family homes this year. Edging up 0.9% in August, builders began construction on 891,000 new homes, which is up from 883,000 in July. Economists expected the report to show a rate of 915,000 starts and 950,000 permits.
The Census Bureau and Department of Housing and Urban Development reported that builders completed homes at a rate of 769,000 in August, up slightly from 767,000 in July.
Permits for single-family homes represented 68.3% of all permit activity in August, which is the highest since September 2011. The 627,000 increase permits in August is the strongest since May 2008. The gain in single-family starts overwhelmed the drop in multifamily activity. Construction of multifamily homes fell 33,000 in August to 263,000. This is an 11.1% decline paired with a 15.7% decline in multifamily permits, dropping to 54,000.
The gains in single-family homes and permits show a sign of increasing builder confidence. According to the National Association of Home Builders’ Housing Market Index (HMI), builder confidence is at its highest level since November 2005, sitting at 58 out of 100.
Although month-to-month improvement shows promise for single-family construction, the long term trend points to a significant shift in building activity to multifamily housing.