- Housing starts fell -5.1% in August to seasonally adjusted rate of 1.416M units, according to Commerce Department
- Housing market supported by record-low interest rates and high demand in suburban/low density areas
For the first time in three months, US housing starts dropped by -5.1% to a seasonally adjusted 1.416M units in August, according to the US Commerce Department. In a poll by Reuters, economists predicted that housing starts would slip to a rate of 1.478M units.
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Undeterred by these unexpected results, single-family homebuilders expressed record high confidence levels in their market segment in September. Yes, the housing market has outperformed the broader economy since the pandemic outbreak. Yes, the newly constructed home segment of the housing market has outperformed that of existing sales. Yes, the 30-year fixed mortgage rate that is hovering at an average of 2.86%, according to Freddie Mac, is helping home sales.
And yes, demand is high for residential properties in the suburbs and low-density areas as a good 40% of the work force continues to work remotely.
This August drag on new starts came from a substantial drop of -22.7% in multi-family housing starts. Multi-family housing tends to be more volatile than single-family housing and in August, the multi-family segment slowed to a pace of 395,000 units. By contrast, single-family housing starts increased +4.1% to a rate of 1.021M units.
Regionally, the South and Northeast experienced slumping multi-family starts whereas the West and Midwest experienced record-breaking activity in multi-family construction starts.
August permits for new construction fell slightly, -0.9%, to a rate of 1.470 units. Amplifying the split in new construction starts in August, multi-family permits dropped -14.2% to a rate of 434,000 units and single-family permits rose +6.0% to a rate of 1.035M units.
Thanks to CNBC.