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First Cut: August housing starts and permits-issued jump on multi-units, but single-family up solidly as well

New orders for housing starts jumped 12.3% to 1.364 million units (SAAR) in August. The increase was due to a solid rise for single-family units to 919,000 and further boosted by a 32.8% surge in multi-unit starts. Starts were up 6.6% compared to a year ago, with gains of 3.4% for single-family units and 14.1% for multi-units. The level blew past market expectations for the report.

It was in the summer months of 2018 that rising mortgage rates began to cut into housing activity, a trend which continued until the near-term peak in mortgage rates in November 2018. Once mortgage rates began to decline again, activity revived. Starts of new homes have benefited from limited supplies of existing homes on the market and availability of units in sizes and price ranges more appealing to entry-level buyers have helped spur further construction.

Starts were up notably in three of four regions. The Northeast surged 30.5%, the Midwest increased 15.4%, and the South was up 14.9%. Starts in the West were unchanged.

Permits-issued in August climbed 7.7% to 1.419 million units (SAAR) and were up 12.0% compared to a year ago. Single-family permits were up 4.5%, both month-over-month and year-over-year. Total multi-unit permits were 13.3% higher than in July and rose 26.3% compared to August 2018. The large number of permits suggests that home building will be vigorous over the coming months.

Permits-issued were up markedly for the Northeast at 26.9%, the Midwest at 14.5%, and the South at 11.0%. Permits in the West for down 7.8%.

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