Single-Family Starts Save the Day

Housing starts rose 0.9% in August pushed by a solid 7% increase in single-family starts and tempered by an 11% fall in multifamily starts. The single-family increase was broad; all four census regions showed increases ranging from 17.5% in the West to 2.3% in the South. Monthly multifamily starts have saw-toothed up and down for several months with four up months and four down months in 2013.

Housing permits demonstrated the same signal with single-family permits up 3% nationally and up or unchanged in every region. August single-family permits at 627,000 are the highest since May 2008. Similar to starts, multifamily permits were down 15.7% to an annual level of 291,000. The three month moving average, a more stable measure of multifamily, has remained above 300,000 since the middle of last year.

The solid single-family report provides additional evidence of the slow but steady improvement in single-family owner-occupied construction that begin in earnest in early 2012. The seasonally-adjusted construction rate increased 36% since January 2012. Even with the steady rise, single-family starts remain at less than half a normal rate of 1.4 to 1.5 million per year. The broad increase across four regions in permits and starts is a solid signal that builders do see continued improvement. NAHB is forecasting a 17% increase in single-family construction in 2013 over 2012 and a more robust 31% increase in 2014.