By Mark Lieberman
Managing Director and Senior Economist
- The rate of housing starts in August, reported by the Census Bureau and Department of Housing and Urban Development, DECLINED 5.8 percent to a seasonally adjusted annualized rate of 1.14 million;
- Most of the decline was due to a slower pace of single-family home construction which fell in August to 722 million – the slowest this year
- Builder confidence, in August, reported Monday, SURGED six points to 65, the highest reading since last October;
- The pace of building permits DIPPED 0.4 percent to 1.139 million, dragged down by filings for permits for multi-family homes which fell 7.2 percent while permits for single-family homes EDGED UP 3.7 percent;
- Despite an improvement in “buyer traffic” according to the NAHB survey, the rate of housing completions DROPPED 3.4 percent to 1.043 million in August. Most of the decline reflected a slower pace of multi-family completions.
Home builders may be more confident, according to the National Association of Home Builders but, they’re not showing it according to the latest report on housing permits and starts, from the Census Bureau.
Perhaps it was the end of the traditional home-buying season which led to the slower construction pace, but then why would builder outlooks surge as they did for September (the survey conducted in the first 10 days of the month generally reflects prior month’s activity.
The Housing Market Index, the NAHB’s confidence survey, jumped six points – the sharpest month-month gain since June 2015 — to 71. The outlook for current sales soared to 71 – the highest level since –September 2005. The forecast of sales six months out also rose to 71 – its highest level since August 2005. And the assessment of buyer traffic went up to 48, the highest level this year.
The improvement in market outlook came on the heels of yet another so-so employment report which showed only a modest gain in jobs and a decline in weekly earnings. Total construction employment dipped in August, according to the Bureau of Labor Statistics though the number of residential construction jobs rose.
Home builders must be operating on the if-you-build-it-he-will-come theory but even that could be a discomforting shock as the median price of anew home fell in July, the last data point, and were down year-year.
The Census construction report underscores that housing hasn’t caught up with the overall recovery in the economy which leaves it vulnerable to another downturn.
Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.