August Housing Starts Lifted by Multifamily Development

Strong multifamily production helped push overall housing starts up in August as single-family starts edged lower due to ongoing supply chain issues and labor challenges. Total starts increased 3.9% to a seasonally adjusted annual rate of 1.62 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The August reading of 1.62 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 decreased 2.8% to a 1.08 million seasonally adjusted annual rate, but are up 23.8% year-to-date. The multifamily sector, which includes apartment buildings and condos, increased 20.6% to a 539,000 pace. "Single-family construction is normalizing at more sustainable levels after an increase in building material pricing," said NAHB Chairman Chuck Fowke. "Demand remains strong, but the market is facing increasing housing affordability issues after a run-up in new and existing home prices. Multifamily construction increased in August, with NAHB expecting a solid gain for apartment construction in 2021 after a slight decline last year." "More inventory is coming for a market that continues to face a housing deficit," said NAHB Chief Economist Robert Dietz. "The number of single-family homes under construction in August — 702,000 — is the highest since the Great Recession and is 32.7% higher than a year ago. While some building materials, like lumber, have seen easing prices, delivery delays and a lack of skilled labor and building lots continue to hold the market back." On a regional and year-to-date basis (January through August 2021 compared to that same time frame a year ago), combined single-family and multifamily starts are 35.9% higher in the Northeast, 14.0% higher in the Midwest, 20.2% higher in the South and 23.9% higher in the West. Overall permits increased 6.0% to a 1.73 million unit annualized rate in August. Single-family permits increased 0.6% to a 1.05 million unit rate. Multifamily permits increased 15.8% to a 674,000 pace. Looking at regional permit data on a year-to-date basis, permits are 25.6% higher in the Northeast, 21.7% higher in the Midwest, 25.6% higher in the South and 28.1% higher in the West. Single-family units permitted but not started are up 50.0% from a year ago, a sign of persistent supply-chain issues.