August Housing Starts Up Sharply, Permits Tumble

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that new housing starts in August rose to a seasonally adjusted annual rate of 1.282 million, an increase of 9.2% from the upwardly revised July rate of 1.174 million and an increase of 9.4% compared with the August 2017 rate of 1.172 million.

The revision to the July rate added by 16,000 new housing starts to the previously reported total. The consensus estimate from a survey of economists expected an August rate of around 1.24 million.

Housing starts recovered sharply from a disappointing July report, exceeding even the high end of analysts’ estimates. The level of new permits issues, however, was disappointing.

For the first eight months of the year, total starts are up 6.9% on a non-seasonally adjusted basis and single-family starts are up 6.3%. Construction of buildings with five or more units is up 8.1% over the same period.

Single-family housing starts rose month over month by 16,000 in August to 876,000. The increase primarily reflects a month-over-month rise of 16,000 in the Midwest and 14,000 in the South.

The seasonally adjusted rate of new building permits slipped to 1.229 million, down 5.7% from the July rate of 1.303 million and 5.5% lower than the August 2017 rate.

Permits for new single-family homes fell month over month in August from a revised annual rate of 873,000 to a seasonally adjusted annual rate of 820,000. The rate decreased by 6.1% year over year.

Multifamily starts for buildings with five or more units increased by 37.1% year over year in August and rose by 27.3% compared with July. This number is more volatile than the single-family number and has been moving mostly sideways since 2013.

In 2017, 1.202 million housing units were started, up 2.4% compared with 2016, and a 10-year high. An estimated 1.263 million permits were issued in 2017, up 4.7% year over year.