August Housing Starts
- Housing starts rose 10.5% in August from 541,000 to 598,000. This was the highest level of new housing starts since the end of the homebuyer tax credit.
- The Briefing.com consensus expected housing starts to increase a much more modest 1.7% to 550,000.
- Even as homebuilder sentiment holds near its all-time lowest levels, builders remain bullish on housing demand.
- Unfortunately, 600,000 new housing starts does not look like a new equilibrium level. Multifamily housing starts, which are extremely volatile, rose 32.2% in August after rising 36.0% in July. Typically, a rise above 20% in one month would bring a decline the next. Since the opposite occurred in August, we expect a substantial reversion in September.
- Single-family construction increased 4.3% during the month -- the first monthly increase since April. We expect single-family construction to remain near its current level through the end of the year.
- Housing starts are at extremely low levels and the outlook is not likely to improve any time soon due to high levels of inventories of unsold new homes. An uptrend in construction will require an improvement in employment and income, and then take some time as inventories need to be reduced.