Multifamily Housing Starts Rise In August While Single Family Drops

Multifamily housing starts were up strongly in August while single family starts declined, according to a report from the US Department of Housing and Urban Development and the US Census Bureau.

The multifamily sector, which includes apartment buildings and condos, increased 20.6% to a 539,000 pace while single-family starts decreased 2.8% to a 1.08 million seasonally adjusted annual rate.

Single family starts, however, are up 23.8% year-to-date with single-family units permitted showing a gain of 50.0% from a year ago.

National Association of Home Builders Chairman Chuck Fowke called the movement in single family a normalization at more sustainable levels after an increase in building material pricing.

He asserted demand remains strong, but the market is facing increasing housing affordability issues after a run-up in new and existing home prices.

Looking at the August decline in single family, NAHB Chief Economist Robert Dietz pointed to delivery delays and a lack of skilled labor and building lots that continue to hold the market back even while building materials, like lumber, have seen easing prices.

NAHB is reporting that in January through August 2021, compared to that same time frame a year ago, combined single-family and multifamily 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.

Overall permits increased 6.0% to a 1.73-million-unit annualized rate in August. Single-family permits increased 0.6% to a 1.05-million-unit rate. Multifamily permits increased 15.8% to a 674,000 pace.

August’s pattern of multifamily housing starts outpacing single family followed July’s results closely.

The seasonally adjusted annual rate for new multifamily construction was more than 10 times faster than that of single-family starts on a year-over-year basis, according to data from the Census Bureau and HUD.

However, single-family housing starts in July were at a seasonally adjusted annual rate of 770,000, an increase of 0.5% above 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 index of builder confidence in August, Dietz said the July increase helped show confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July.