Despite supply chain disruptions in materials and labor shortages, housing starts continued to rise in August. Multifamily construction led the way.
New Home Construction Starts Up +3.9% m/m in August
New home builders were busy in August. They began construction on 1.615M homes. These 1.615M homes represented a month-to-month increase of +3.9% from July. Likewise, according to a new report by the US Census Bureau and the US Department of Housing and Urban Development (HUD), August’s housing starts were +17.4% higher than housing starts in August 2020.
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Building Permits Up in August
Nationwide, 1.728M building permits, an increase of +6% m/m, were pulled in August. These 1.728M pulled building permits represented an increase of +13.5% compared to August 2020.
There were also 1.33M completions in August 2021, a decrease of -4.5% m/m from July 2021, yet, compared with August 2020, completions were +9.4% higher.
Odeta Kushi, Deputy Chief Economist with First America, said, “The August month-to-month increase in permits and housing starts indicates that builders are eagerly responding to near-record -low rates, a limited supply of existing-homes for sale and sturdy demand driven by millennials aging into home ownership.”
Nearly Endemic Market Challenges of Materials and Labor Being Met
Industry material shortages caused by supply chain disruptions and choking labor shortages are reflected in the new home market. There was an increase of +50% in the number of single-family units permitted but not started compared to one year ago. Also, only 25% of new homes sold in July were actually completed.
Mathew Speakman, an economist with Zillow, said, “the nation’s homebuilders are finding ways to defy expectations, keep their pipelines moving and put up more homes. It’s not all perfect, and some creativity is being shown by builders to keep things moving. These choppy waters are unlikely to calm anytime soon, but builders are continuing to find ways to stay afloat.”
Single-Family Starts Down
As we note last month, single-family housing starts were unexpectedly down in July. August merely continued that downward trend in single-family starts by dropping another -2.8%.
Multifamily Housing was Primary Driver
Multifamily building permits and multifamily housing starts increased +15.8% and +20.8% respectively from July to August.
Combined single-family and multifamily starts were up nationwide. The Northeast was the big winner here with its regional increase of +35.9% y/y (January through August) compared to the same time period in 2020.
Thanks to the US Census Bureau, the US Department of Housing and Urban Development, First American, Zillow and HousingWire.
