Key Takeaways:
- Multifamily leads the growth with a nearly 22% monthly gain, as single-family units slip;
- Over a million units have been started year-to-date — 21% higher than last year;
- The South, easily the largest region for housing starts, has also shown the most consistent gains for the year.
By Manuel Gutierrez, Consulting Economist to NKBA
August housing starts rose 3.9% to an annual rate of 1.615 million units, carried by a nearly 22% jump in the highly volatile multifamily sector. This counters the 2.8% drop in single-family starts (Figure 1).
Compared to the same month last year, total housing starts are 17.4% higher. Again, this gain is driven by the multifamily sector, which was up a massive 53% over the last 12 months. Single-family construction grew a much more modest 5.2% over the same period.
As for year-to-date starts, 1.08 million houses have been built so far through August, which is 191,000, or 21%, more than the same period last year.
Year-to-date housing starts are up a substantial 21% through August, translating into nearly 200,000 more units.
For year-to-date data, both single- and multifamily new housing are far ahead of last year’s pace. There have been 147,000, or 24%, more single family-units started, and 44,000 (16%) more multifamily units.
Figure 1 also reveals that housing starts each month this year, which are expressed in annual rates, exceed the total number built last year; with last year’s starts shown by the figure just above the gray dashed line.
Total housing starts on an annualized basis have averaged 1.59 million this year, which is 15% more than last year’s total of 1.38 million units. Similarly, single-family starts are averaging 1.12 million per month (annualized), 14% higher than last year’s 980,000 monthly figure.
The pattern is similar for multifamily housing, with this year’s monthly activity exceeding the total number built in 2020 each month except for February.
August data reveals that three of the four U.S. regions saw an increase in activity (Figure 2). Only the West fell off. This region, which accounts for one of five new U.S. houses, declined by 21% for the month to an annual pace of 318,000 units.
The biggest increase by percentage was in the Northeast, with starts jumping a powerful 167% to an annual pace of 179,000 units. However, this increase is on the heels of a heady 54% decline in July, so clearly, it is a very volatile region. It should be noted that the Northeast is the smallest of the four regions in terms of housing starts, so any significant changes either up or down do not affect the national figures to any great extent.
Starts in the Midwest also rose, but by a more modest 11% to an annual rate of 206,000 units.
Finally, starts in the South, the nation’s largest housing market, were up just 1% in August, to 912,000 units. This is the only region where housing starts have risen virtually every month this year.
The blue lines in Figure 2 capture the underlying trend in housing construction for each of the regions. Two of the regions, the Midwest and the West, have been generally falling in the past few months. Conversely, the other two regions have been going the other way, with the South the most consistent, rising in each of the last five months.
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