Housing Construction Activity Mixed in August: Starts Up, Permits Down

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • The rate of housing permit filings in August ROSE 5.7 percent to a seasonally adjusted annual rate (SAAR) of 1.3 million units, matching January for the fastest pace this year
  • The rate of permits for single-family home starts in August FELL 1.5 percent to an SAAR of 800,000 units;
  • The rate of permits for multi-family homes IMPROVED 19.6 percent in August to 500,000 units (SAAR), the fastest pace since last October;
  • The rate of housing starts FELL 0.8 percent in August to an SAAR of 1.18; single-family starts Improved 1.6 percent to an SAAR of 851,000 while multi-family starts FELL 6.5 percent to an SAAR of 329,000 million, the slowest pace since last November;
  • The rate of home completions in July DROPPED 10.2 percent from July with for both single- and multi-family completions declining.

Image result for housing starts

Perhaps with one eye on weather forecasts, residential construction activity generally slipped in August, a direction reflected in the monthly Housing Market Index (HMI) released Monday by the National Association of Home Builders (NAHB). Tuesday’s activity report, a product of both the Census Bureau and Department of Housing and Urban Development, did indicate a continuation of the trend toward multi-family housing and away from single-family

Change since July 2017

Permits Starts Completions
Total     
Single-Family      ↓
Multi-Family      ↑

 

 

 

 

The Bureau of Labor Statistics earlier this month reported the number of residential jobs, including specialty trade contractors, increased 13,00 in August to .2,709,000 – the strongest month-month jobs gain since February.

Single-family permits represented 61.5 percent of all permits in August, down from 61.9 percent a year ago. Starts of single-family homes through August were 72.1 percent of all starts compared with 62.5 percent a year earlier.

That could all change however in the wake of Hurricanes Irma and Harvey which will likely divert labor and material to Florida, Louisiana and Texas as part of a massive rebuilding effort. At the very least the resulting scarcity of labor and material in other parts of the country could drive up the cost of a new home.

The NAHB’s gauge of builder confidence increased in September dipped four points from the original August reading (three points after the August reading was revised downward). The confidence measure still stand at a positive 64. While one month does not constitute a trend, the direction of the change, if it continues, is not encouraging.

Builders are already under pressure from a drop in new home sales which fell in July (the most recent reporting month) to an annual rate of 571,000 – the lowest level of the year and a 9.4 percent drop from July, the steepest slide in a year.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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