US housing starts declined 11.3% in August to a seasonally adjusted annual rate of 1.283 million units (consensus 1.435 million). New US home construction fell in August to the lowest level since June 2020. Single unit starts were down 4.3% to a seasonally adjusted annual rate of 941,000. Higher financing costs are creating headwinds for builders and preventing activity from being stronger in a supply-constrained housing market. US building permits however increased 6.9% to 1.543 million (Briefing.com consensus 1.442 million) with permits for single units up 2.0% to 949,000. Yesterday, the NAHB housing market index came in much weaker than expected at 45 versus 50 expected.
The strength in permits, which is a leading indicator offers hope that September may see improved home construction numbers, needed to overcome the tight supply of existing homes for sale. Affordability is the major issue overhanging; mortgage demand hovers near its lowest level since 1997. Single-unit starts are down 28.1% year-over-year and single-family permits being down 21.2% year-over-year.
The move suggests disruption and demographic influences.
The key indicator from the report had been the growth seen in single-family starts and single-family permits, a leading indicator which is needed given the limited supply of existing homes for sale. Starts took a breather this month.
United States Housing Starts August 2023
- Housing Starts Aug: 1283K (Est 1438K; PrevR 1447K)
- Prior month for housing starts 1.447M revised from 1.452M
- Housing Starts (M/M) Aug: -11.3% (Est -1.0%; Prev 3.9%)
- Housing starts lowest level since 2020 pandemic.
- 14.8 percent (±9.0 percent) below the August 2022 rate of 1,505,000.
- Single‐family housing starts in August were at a rate of 941,000; this is 4.3 percent (±8.8 percent) below the revised July figure of 983,000.
- The August rate for units in buildings with five units or more was 334,000
- Biggest decline was recorded in the West (-28.9% to 281K), followed by the Midwest (-7.5% to 160K) and the South (-4.9% to 745K) while starts rose 1% in the Northeast (to 97K).
The housing market has been rocked by high interest rates. It had been supported by low interest rates and increasing demand from people moving away from big cities due to the coronavirus crisis, but the momentum slowed with rising inputs amid supply constraints could limit production to ease a shortage of homes. Homebuilding activity has seen an adverse impact from sharply higher mortgage rates on buyer demand and builder sentiment. Further to rising mortgage rates, headwinds come from supply constraints and higher house prices. Rates are now sharply higher (over 6.7%).
United States Building Permits June 2023
- Building Permits Aug: 1543K (Est 1440K; PrevR 1443K)
- Building permits high level for the year 1.55M in February
- Building Permits (M/M) Aug: 6.9% (Est -0.2%; Prev 0.1%)
- On an annual basis, national permits fell by 2.7% below the August 2022 rate of 1,586,000.
- Single‐family authorizations in August were at a rate of 949,000; this is 2.0 percent above the revised July figure of 930,000.
- Authorizations of units in buildings with five units or more were at a rate of 535,000 in August.
- Permits grew in the Northeast (9.3% to 118 thousand), the Midwest (14.3% to 208 thousand), the South (3.9% to 843 thousand), and West (9.4% to 374 thousand).
Housing Completions
- Privately‐owned housing completions in August were at a seasonally adjusted annual rate of 1,406,000. This is 5.3 percent (±15.1 percent)* above the revised July estimate of 1,335,000 and is 3.8 percent (±13.2 percent)* above the August 2022 rate of 1,355,000.
- Single‐family housing completions in August were at a rate of 961,000; this is 6.6 percent (±11.1 percent)* below the revised July rate of 1,029,000.
- The August rate for units in buildings with five units or more was 433,000.
Notice of methodology change: Beginning with the January 2022 New Residential Construction release on February 17, 2022, the monthly Building Permits Survey design will change from a representative sample to a cut‐off sample. This change will allow complete local and county data on new housing units authorized by permits to be published on a monthly basis going forward. For additional details on this change and the impact on New Residential Construction, see our FAQ document.
Source: US Census
From The TradersCommunity News Desk