Single-family home starts rose 3.4% last month and are down 4% for the year. But Aug. multifamily starts – apartments and condos – surged 28%.
WASHINGTON – Overall housing starts posted a double-digit gain in August due to a surge in multifamily production. The number reported by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau rose 12.2% to a seasonally adjusted annual rate of 1.58 million units (yearly pace if August sales continue) off of a downwardly revised July reading. The
Within that overall number, single-family housing starts increased 3.4% to a 935,000 seasonally adjusted annual rate, though they’re down 4% so far this year.
However, the multifamily sector, which includes apartment buildings and condos, increased 28% to an annualized 640,000 pace in August.
“Single-family production is running at a weakened pace due elevated mortgage rates and high construction costs that have led to a major slowing of the housing market and exacerbated housing affordability,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB). “The slowdown in the single-family market has been reflected in our builder surveys, which have posted declines every month in 2022.”
Jing Fu, NAHB’s director of forecasting and analysis, says the pace has been below 1 million for the past two months.
“Expected additional tightening of monetary policy from the Federal Reserve, falling builder sentiment and a 15.3% year-over-year decline in single-family permits points to further weakening for the housing sector,” says Fu. “The one bright spot is multifamily construction, which remains very strong given solid demand for rental housing.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 4.6% higher in the Northeast, 2.4% lower in the Midwest, 5.6% higher in the South and 1.5% lower in the West.
Overall permits – an indication of future building activity – decreased 10.0% to a 1.52 million unit annualized rate in August. Single-family permits decreased 3.5% to an 899,000 unit rate. Multifamily permits decreased 17.9% to an annualized 618,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 3.1% lower in the Northeast, 1.2% higher in the Midwest, 1.2% higher in the South and 1.4% lower in the West.
The number of apartments under construction (890,000 residents in 2-plus unit properties) is at the highest level since the first quarter of 1974.
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