Housing Starts And Permits Fall, Single-Family Home Permits Increase

The details are not as weak as the headlines as the new home market remains one of the positives for the economy. Housing starts and permits did fall in August, down a sharp 5.4 percent for starts to a lower-than-expected 1.142 million annualized rate and down 0.4 percent for permits to 1.139 million which is also lower than expected. But permit growth for single-family homes, which is a key indication on housing demand, rose a very solid 3.7 percent to a 737,000 rate which is about where permits were trending earlier in the year.

But the nearer term outlook is less positive as starts for single-family homes fell 6.0 percent to 722,000. Multi-family starts also show weakness, down 5.4 percent to 420,000 and with permits down 7.2 percent to 402,000. The permit dip pulls the year-on-year reading for multi-family homes deep into the negative column at minus 11.8 percent though multi-family starts are still positive, at least for now at plus 4.7 percent. A positive in the report and reflecting the general strength in prior starts is a 0.9 percent rise in total homes under construction to a new cycle high at 1.038 million.

The strength for single-family permits, which in contrast to the once high-flying and lower cost multi-family category, is a solid plus for residential construction. New home sales data for August will be posted on Monday of next week.

Recent History Of This Indicator:
Sales of new homes have been strong this year but gains for housing starts and permits have been no better than gradual and mixed. Starts in July did rise a strong 2.1 percent to a 1.211 million annualized rate and followed June's 5.6 percent surge, but permits, down fractionally to 1.152 million in July, have been very soft. Single-family starts have been generally weak in contrast to starts for multi-family homes which, reflecting strength in rentals, have been strong.