Dive Brief:
- Housing starts fell 3.0% between July and August to an annualized rate of 1.13 million, the Commerce Department reported Thursday. August starts were 16.6% higher than during August 2014.
- Economists had predicted starts would slip in August, and the results came in close to those expectations. Those surveyed by The Wall Street Journal predicted housing starts would reach 1.18 million in August.
- However, building permits — a predictor of future housing starts — rose 3.5% in August to 1.17 million, 12.5% above August 2014.
Dive Insight:
The Commerce Department also revised its July results down to 1.16 million from the initial report of 1.21 million.
July saw a significant increase in single-family home construction. However, both single-family and multifamily starts fell 3% in August — a sign the market is still in the midst of a slow recovery, rather than a burst of growth.
Of the four U.S. regions, all saw decreases in starts, with the exception of the South. The Northeast had the greatest decline, with a 33.7% dip.
The number of August starts may have put a slight damper on industry expert hopes for a rapid rally, but the significant bump in building permits foretells a strengthening market in the coming months.
The Commerce Department report came one day after the NAHB/Well Fargo Housing Market Index revealed builder confidence rose one point in September as homebuilders feel increasingly optimistic about the market's future. However, they continue to report difficulty finding qualified labor and securing lots for new home construction.
Data for August's existing home sales, announced Sept. 21, and new home sales, announced Sept. 24, will provide a better picture of the current state of the housing market's recovery.
