In a significant development for the US housing market, new data released on Wednesday reveals that housing starts surged beyond expectations last month, showing a remarkable double-digit sequential growth specifically in single-family projects. According to the latest figures from the Census Bureau and the Department of Housing and Urban Development, housing starts rose by 9.6%, reaching a seasonally adjusted annual rate of 1.36 million units in August.
This figure reflects a notable increase from the revised 1.24 million units reported for July. Analysts had projected housing starts to be at the 1.32 million mark, as per a survey conducted by Bloomberg, indicating a more tempered growth of around 6.5% from the unrevised levels in July. "After likely being weighed down by Hurricane Beryl in July, housing starts rebounded more than expected in August, and the forward-looking permits data point to additional gains in starts in the months ahead," commented Nancy Vanden Houten, a Senior Economist at Oxford Economics, in remarks conveyed through email.
She further outlined expectations for a momentum gain in housing starts projected for the fourth quarter of this year and extending into 2025. On an annual basis, the data shows an increase of 3.9% in housing starts, underscoring the resilience in the sector despite various impediments. The segment of single-family homes showcased significant strength, advancing 16% on a sequential basis to 992,000 units and demonstrating a year-over-year increase of 5.2%, as delineated in the report.
Conversely, the multi-family sector experienced a decline, with starts on buildings comprising at least five units falling by 6.7% to 333,000 units month over month, and showing a year-over-year decrease of 6.2%. Geographically, the data reflected mixed trends nationwide: housing starts fell sharply by 27% in the Northeast region, while they rose impressively by 30% in the Midwest, 16% in the South, and 5.9% in the West. Moreover, building permits, which serve as a predictive gauge of homebuilding activity, also saw a positive uptick, increasing by 4.9% on a monthly basis to reach 1.48 million units.
This figure surpasses market expectations, which were set at 1.41 million units. Notably, authorizations for units in multi-unit buildings grew by 8.4%, while single-family permits displayed a modest rise of 2.8% on a seasonally adjusted basis. However, on an annual basis, overall permits witnessed a decline of 6.5%. In terms of housing completions, there was an increase of approximately 9.2% month over month, culminating in a total of 1.79 million units.
Additionally, recent data provided by the National Association of Home Builders and Wells Fargo indicated a resurgence in homebuilder confidence in September, marking the first improvement in five months, attributed to the decline in mortgage rates. "The ongoing construction in the housing sector remains vital due to enduring supply needs, supportive lower mortgage rates, and more favorable credit conditions for builders," Vanden Houten articulated, highlighting the significant factors underpinning the current trends in the housing market. Looking ahead to monetary policy, Oxford Economics anticipates that the Federal Reserve will initiate a rate-cutting cycle, beginning with a 25-basis-point move later today, a shift that could further stimulate the housing market and broader economy..