Housing Starts, Building Permits Slowed in August

All three measures of residential construction activity fell in August compared to the July numbers and one, building permits, continued to lag year-ago levels. The report from the U.S. Census Bureau and the Department of Housing and Urban Development showed the early stages of construction activity in the South was especially muted.

Permits for construction of residential units were issued in August as a seasonally adjusted annual rate of 1,139,000.  This was only a fractional (0.4) decline from July, but the number for that month, originally reported at 1.152.000 units, already an 0.1 percent loss from June, was revised down to 1,144,000 units.  Last month's rate of permitting was 2.3 percent below the rate of 1,166,000 in August 2015.

The August estimate was well below the low end of estimates provided by analysts to Econoday.  Expectations were for a number in the range of 1.153 million to 1.195 million with a consensus of 1.167 million.

Permitting for single family construction rose during the month with a seasonally adjusted estimate of 737,000, an increase of 3.7 percent from July and reversing a 3.7 percent drop in that metric from June.  Permits for construction of units in building of five or more was at a rate of 370,000, a decline of 8.4 percent from July and 13.1 percent from a year earlier.  The July multi-family number was revised from 411,000 units to 404,000 on a seasonally adjusted annual basis.

On a non-adjusted basis there were an estimated 107,000 permits issued in August compared to 95,100 in July.  Single-family permits totaled 71,300, a gain of slightly more than 10,000 compared to the previous month.

Starts of privately funded construction of housing units in August were at a seasonally adjusted annual rate of 1,142,000 units, a drop of 5.8 percent from July when starts were estimated at 1,212,000, a slight upward revision from the original estimate.  Starts were incrementally higher, 0.9 percent, than those a year earlier.

Analysts had been looking for housing starts to come in within a range of 1.153 to 1.195 million units.  The consensus was 1.152 million.

Single family housing starts were at a seasonally adjusted rate of 722,000, down 6.0 percent from July and 1.2 percent below the previous August.  The multi-family sector saw starts decline 6.9 percent for the month to a seasonally adjusted 403,000 units although they remained 2.3 percent higher on an annual basis.

On a non-adjusted basis there were 100,700 housing units for which construction started in August compared to 114,200 in July.  Single family starts totaled 66,700, down from 72,700 a month earlier.

Housing units were completed during the month at a seasonally adjusted annual rate of 1,043,000, 3.4 percent below the July estimate of 1,080,000 (revised from 1,026,000) units.  Completions were 8.3 percent higher than in August of last year.

Single family housing completions were at a rate of 752,000, down 0.3 percent month-over-month but a 13.3 percent annual increase.  Multi-family units were completed at a rate of 283,000, decreases of 11.0 and 3.1 percent respectively from the earlier periods.

On a non-adjusted basis there were 98,300 housing units completed during the month, up from 93,700 in July. Two-thirds of the completions were single-family residences.

At the end of the reporting period there were 131,000 permits that had been issued but for which construction had not begun.  More than half of the unused permits were in the South and 70,200 of the total were for single family houses. There were 1,055,000 units under construction at the end of August, 450,200 of which were single family units.

Permits were issued in the Northeast region at a rate 5.1 percent higher than in July but down 6.4 percent from August 2015. Housing starts rose 7.6 percent and 24.8 compared to the respective earlier periods. Completions jumped by 30.4 percent from the previous month and 57.9 percent year-over-year.

In the Midwest there was an increase of 4.2 percent in permitting month-over-month and 11.3 percent compared to the previous year. Housing starts increased for the month and the year by 5.6 percent and 17.1 percent respectively.  Completions were down 11.9 percent from July but eked out a 0.6 percent gain compared to a year earlier.

The South saw a slowing of permits by 3.4 percent for the month and 3.7 percent for the year. Housing starts were down significantly, by 14.8 percent for the month and 13.1 percent compared to August 2015. Completions were up by 2.4 percent and 13.9 percent for the two earlier periods.

Permits were up a slight 0.7 percent in the West compared to July but were 6.2 percent lower year-over-year. Housing starts rose by 1.8 percent month-over-month and 15.7 percent on an annual basis. There were 29.7 percent fewer completions than in July and 12.8 percent fewer than in August 2015.