Housing Starts Dip to 3-Year Low: Census Bureau

A housing market in need of more inventory didn’t get much of an assist from homebuilders last month.

Privately-owned housing starts declined 14.8 percent year-over-year in August, according to a monthly report from the U.S. Census Bureau. The seasonally adjusted annual rate of 1.28 million housing starts was down 11.3 percent from July’s revised estimate, clocking in at the lowest level since June 2020, according to Inman.

Overall, single-family housing starts fell 4.3 percent from July to August. Multifamily starts declined precipitously, falling 41 percent year-over-year.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, published one day before the Census Bureau released its data, reported sentiment levels had dropped below the breakeven threshold for the first time in five months.

“High mortgage rates are clearly taking a toll on builder confidence and consumer demand,” NAHB chief economist Robert Dietz said.

Builders are completing more homes than they’re starting. Privately-owned housing completions recorded a seasonally adjusted annual rate of 1.41 million in August, up 5.3 percent from July and 3.3 percent year-over-year.

The greatest glimmer of hope for builders and homebuyers alike are the permitting numbers from August. Permits accounted for a seasonally adjusted annual rate of 1.54 million housing units in August, an increase of 6.9 percent from the previous month. Nevertheless, that’s still a 2.7 percent decrease from a year ago.

In a statement following the Census Bureau’s report, Zillow senior economist Nicole Bachaud took an optimistic view.

“Permits are up monthly indicating some builders might be more hopeful that things will turn around soon,” Bachaud said, adding that builders are able to incentivize the sale of completed construction projects because tight inventory is restricting other options on the market.