Single-family housing starts in the US experience significant increase as building permits show moderate rise
U.S. single-family home construction experienced a significant rebound in August, although the rise in building permits indicated that the momentum may not be sustained due to an increasing supply of new homes on the market. The surge in single-family housing starts reported by the Commerce Department was likely influenced by the aftermath of Hurricane Beryl in the South, particularly in Texas. Additionally, higher mortgage rates had previously deterred homeowners from listing their properties, resulting in a shortage of supply in the housing market and creating an opportunity for builders.
“A renewed dip in single-family construction activity is likely over the next few months as homebuilders seem to have responded too aggressively to the slight upturn in new home sales in 2023, and are now left with an excessive level of inventory,” said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. However, lower mortgage rates are expected to stimulate demand for new homes.
Single-family housing starts, which represent the majority of homebuilding, surged 15.8% in August to a seasonally adjusted annual rate of 992,000 units. Permits for future construction of single-family homes also increased by 2.8% in August. In contrast, starts for housing projects with five units or more dropped by 6.7%. Overall housing starts rose by 9.6% to a rate of 1.356 million units.
The Northeast experienced a significant increase in single-family starts, while the South saw a surge following Hurricane Beryl’s impact in July. Multi-family building permits also rose, indicating a positive trend in the construction sector.
Overall, housing completions increased, but the number of housing units under construction decreased slightly. The inventory of single-family housing under construction also saw a slight dip. These developments suggest a complex landscape for homebuilders in the coming months as they navigate changing market conditions and demand.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.