Multi-family housing starts rose sharply in August while single-family housing starts declined, according to a report from the US Department of Housing and Urban Development and the US Census Bureau.
The multi-family sector, which includes apartment buildings and condos, grew 20.6% at a pace of 539,000, while single-family housing starts fell 2.8% at a seasonally adjusted annual rate of 1.08 million.
However, single-family home starts are up 23.8% year-to-date, with licensed single-family units posting a gain of 50.0% from a year ago.
National Homebuilders Association president Chuck Fowke called the single-family movement normalizing to more sustainable levels after rising prices for building materials.
He said demand remains strong, but the market faces growing housing affordability issues after soaring prices for new and existing homes.
Regarding the drop in the number of single-family homes in August, NAHB chief economist Robert Dietz highlighted delivery delays and a lack of skilled labor and building land that continue to shrink. slow down the market even though building materials, such as wood, have seen their prices drop.
NAHB reports that between January and August 2021, compared to the same period a year ago, combined single-family and multi-family housing starts are 35.9% higher in the Northeast, 14% higher in the Midwest, 20.2% higher in the South and 23.9% higher in the West.
Total permits increased 6.0% to an annualized rate of 1.73 million units in August. Single-family home permits increased 0.6% to a rate of 1.05 million units. Multi-family permits increased 15.8% to a pace of 674,000.
The trend of multi-family housing starts in August overtaking single-detached homes closely followed July’s results.
The seasonally adjusted annual rate of new multi-family construction was more than 10 times faster than that of single-family housing starts year over year, according to Census Bureau and HUD data.
However, single-family housing starts in July were at a seasonally adjusted annual rate of 770,000, an increase of 0.5% from the revised June figure of 766,000.
Commenting on the National Association of Home Builders / Wells Fargo housing market index which showed a two point increase in the builders’ confidence index in August, Dietz said the July increase helped show confidence remains strong following weak GDP reports which were offset by positive employment growth in July.