Single-family starts showed continued growth in August but overall housing production fell 5.1 percent to a seasonally adjusted annual rate of 1.42 million units due to a double-digit percentage decline in multifamily production, according to a report from the U.S. Housing and Urban Development and Commerce Department. The pace of single-family starts in August was the highest production rate since February.
The August reading of 1.42 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 4.1 percent to a 1.02 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, decreased 22.7 percent to a 395,000 pace.
“Consistent with surging builder confidence, single-family starts rose in August to meet rising buyer traffic,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Tampa, Fla. “Builders continue to face concerns in terms of rising lumber prices and supply chain shortages of other building materials.”
“Total housing starts were down in August on a decline for multifamily construction, with multifamily 5+ unit permits now down 8.3 percent on a year-to-date basis,” said NAHB Chief Economist Robert Dietz. “But low interest rates and solid demand are spurring single-family construction growth, which makes up the bulk of the housing market. Single-family permits continue to rise as well, and are now up almost 7 percent on a year-to-date basis.”
On a regional and year-to-date basis (January through August of 2020 compared to that same time frame a year ago), combined single-family and multifamily starts are 13.6 percent higher in the Midwest, 5.4 percent higher in the South, 3.8 percent higher in the West and 4.5 percent lower in the Northeast.
Overall permits decreased 0.9 percent to a 1.47 million unit annualized rate in August. Single-family permits increased 6.0 percent to a 1.04 million unit rate. Multifamily permits decreased 14.2 percent to a 434,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 2.6 percent higher in the Midwest, 4.8 percent higher in the South, 8.2 percent lower in the Northeast and 1.3 percent lower in the West.