August housing starts lifted by multifamily development

Washington, DC – Strong multi-family production helped boost the general start of housing construction in August as single-family homes are less likely to start due to ongoing supply chain problems and labor challenges, according to the National Association of Home Builders (NAHB). Total starts rose 3.9% to a seasonally adjusted annual rate of 1.62 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The August reading of 1.62 million starts is the number of home builders who would start if development continued at this pace over the next 12 months. Within this total number, the number of start-ups has decreased by 2.8% to 1.08 million seasonally adjusted annual percentage, but has increased by 23.8% this year. The multi-family sector, which includes condominiums and condos, grew 20.6% to a pace of 539,000.

“Single-family homes are normalizing to more sustainable levels after building material prices rise,” said Chuck Fowke, president of NAHB. “Demand remains strong, but the market is facing increasing affordability issues following a ramp-up of new and existing house prices. Multi-family construction picked up in August, with NAHB forecasting solid gains for apartment construction in 2021, after a slight decline last year.”

Robert Dietz, chief economist at NAHB, added: “Inventory is increasing for a market that continues to suffer from a housing shortage. The number of single-family homes under construction in August – 702,000 – is the highest since the Great Recession at 32.7 % higher than a year ago, while some building materials, such as wood, have reduced prices, delivery delays and a lack of skilled labor and building plots continue to hold the market down.”

On a regional and year-to-date basis (January to August 2021 compared to the same period a year ago), combined single-family and multi-family starts are 35.9% higher in the Northeast, 14% higher in the Midwest, 20.2% higher in the South and 23.9% higher in the West.

Total licenses rose 6% in August to 1.73 million units year on year. Single family licenses increased 0.6% to a unit rate of 1.05 million. Multi-family permits were up 15.8% to a pace of 674,000.

Looking at year-over-year regional permit data, permits are 25.6% higher in the Northeast, 21.7% higher in the Midwest, 25.6% higher in the South and 28.1% higher in the West.

Permitted but unstarted single-family homes are up 50.0% from a year ago, a sign of ongoing supply chain problems.

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