A new report from the U.S. Census Bureau and the Department of Housing and Urban Development showed August housing starts up 3.9% from July and 17.4% year-over-year, despite labor and supply shortages.
Homebuilders started 1.615 million homes in August. Nationally, 1.727 million building permits were pulled, 6% higher than July and higher than the expected 1.6 million.
The number of homes finished in August was 1.33 million, down 4.5% from July but up 9.4% from the same time last year. Multi-family starts drove the gains completely, with single-family starts falling 2.8%. Multi-unit starts are up to 52.7% year-over-year, while single-family starts have only risen 5.2%. Permits for single-family units are also down 0.1% while multi-family permits increased 44.3%.
Starts fell in the West but rose in every other area. In the Northeast, starts rose 167.2% in August, the largest monthly gain on record since 1959. Single-family home starts in New England jumped 52%.
“Real estate markets are grappling with a decade of underbuilding, which has pushed this year’s buyers to pay record-high prices for a tight number of homes for sale,” said George Ratiu, senior economist at Realtor.com. “As millennials—the largest generation in our country’s history—came of age during the last 10 years, new construction volume lagged, creating a shortage of 5.2 million new homes.”
August’s increase comes on the heels of a Wells Fargo/National Home Builders Association report showing builder confidence rose for the first time in three months despite continued labor shortages. Building supplies remain expensive and difficult to get ahold of, but prices are cooling, especially for softwood lumber.
“The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity, as reflected in the September HMI,” NAHB chief economist Robert Dietz said in the release.
“While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher.”