Housing Starts Rise in August Amid Ongoing Affordability Concerns

Filed in Economics, Home Building, Multifamily by on September 19, 2018 0 Comments

home framed and under constructionTotal housing starts increased 9.2% in August to a seasonally adjusted annual rate of 1.28 million units, according to newly released data from HUD and the Commerce Department.

The August reading of 1.28 million is the number of housing units builders would start if they maintained this pace for the next 12 months.

Within this overall number, single-family starts increased 1.9% to 876,000 units while the multifamily sector increased 29.3% to 408,000.

“Builders remain largely confident because the economy is solid and demographics point to continued demand,” said NAHB chairman Randy Noel.

While housing production rose, overall permits dropped 5.7% to 1.23 million units in August. Single-family permits fell 6.1% to 820,000 units, and multifamily permits dropped 4.9% to 409,000 units.

“Although we saw an increase in starts in August, we are likely to see softening in the market in the months ahead,” said NAHB chief economist Robert Dietz. “Affordability is a particular concern because of home price gains, due in part to the high regulatory burden on new home construction. Increasing costs for building materials, prompted partially by recently imposed tariffs on a wide range of products, are also a concern. Moreover, interest rates are continuing their gradual upward climb.”

Regionally, the West led the nation with a 19.1% increase in combined single-family and multifamily housing starts. Unchanged in the Northeast, starts increased 9.1% in the Midwest and 6.5% in the South.

Led by a 19.2% decline in the Northeast, permits decreased in every region. They were down 1.7% in the Midwest, 2.9% in the South and 8.4% in the West.