Housing Starts Fell 14.4% In August

Posted by Patrick Barnard on September 18, 2014 No Comments
Categories : Residential Mortgage

After jumping an impressive 15.7% in July, housing starts dropped 14.4% in August to reach a seasonally adjusted annual rate of 956,000 units – far below the revised July estimate of 1,117,000 units – according to figures released from the U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau.

Although the number of new homes built during the previous 12 months fell short of analysts' forecasts, the rate of new construction was nevertheless 8% above the August 2013 rate of 885,000 units.

Most of the drop was due to a sharp decrease in multifamily construction. The August rate for units in buildings with five units or more was 304,000 – a 31% drop compared to the July estimate of 423,000 units.

However, when looking at multifamily housing starts, it should be noted that the July estimate of 423,000 units was a significant increase from June's annual rate of 318,000 units, which is closer to the monthly average for the year.

Single-family housing starts in August were at a rate of 643,000 units – 2.45% below the revised July figure of 659,000.

‘The August drop in multifamily starts is not too surprising, given how volatile the numbers have been the last 18 months,’ says David Crowe, chief economist of the National Association of Home Builders (NAHB), in a release. ‘And while single-family starts registered a slight decline, low mortgage rates, affordable home prices and pent-up demand will keep single-family production moving forward in 2014.’

Building permits in August were running at a seasonally adjusted annual rate of 998,000, which is 5.6% below the revised July rate of 1,057,000 units, yet, 5.3% above the August 2013 estimate of 948,000 units. Permits for single-family homes were at a rate of 626,000, which is 0.8% below the revised July figure of 631,000. Permits for buildings with five units or more were at a rate of 343,000 units.

Housing completions in August were at a seasonally adjusted annual rate of 892,000, which is 3.2% above the revised July estimate of 864,000, yet, 16.9% above the August 2013 rate of 763,000. Completions of single-family homes were at a rate of 591,000, which is 8.2% below the revised July rate of 644,000. Completions of units in buildings with five units or more was 292,000.

Combined housing starts fell in all regions of the country. The Northeast, Midwest, South and West posted drops of 12.9%, 10.3%, 10.9% and 24.7%, respectively.

Earlier this week, NAHB reported that builder confidence in the market for newly built, single-family homes rose in September to reach the highest point since November 2005.

‘Our members are telling us that traffic to new model home sites and sales expectations are on the rise,’ says Kevin Kelly, chairman of NAHB and a home builder and developer from Wilmington, Del. ‘Despite the monthly blip, single-family starts are still eight percent above last year's level.’

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