Building Permits Continue Higher; Housing Starts Ebb

This morning's Residential Construction report from the Census Bureau and Department of Housing and Urban Development for August was mixed with a moderate increase in building permits and a corresponding downturn in housing starts.  Housing completions were well above those in July.

Housing permits were issued at a seasonally adjusted annual rate of 1,170,000, an increase of 3.5 percent from July and well above analysts' consensus expectations of 1,160,000 as reported by Bloomberg.  The July rate was revised to 1,130,000 from the 1,119,000 originally reported.  The August permitting rate was 12.5 percent higher than the seasonally adjusted annual rate of 1,040,000 in August 2014.

Single-family permits were issued in August at a rate of 699,000, up 2.8 percent from the revised (from 679,000) 680,000 units in July and 8.7 percent above the August 2014 rate.  Multifamily permitting was at a 440,000 rate compared to 422,000 in July.

On a non-seasonally adjusted basis issued permits totaled an estimated 98,300, down from 102,000 in July.  Single family permits were down only slightly at 61,200.

Housing starts in August were at a seasonally adjusted annual rate of 1,126,000 units, down 3.0 percent from July's 1,161,000 but 16.6 percent higher than a year earlier when starts were at a rate of 966,000. Analysts had expected a rate of 1,160,000 for August. The July estimate was a substantial downward revision from the original estimate of 1,206,000. 

Single family construction starts were estimated at a rate of 739,000, also a 3.0 percent drop from the previous month's revised 762,000 estimate (originally put at 782,000 units) but reflecting an annual increase of 14.9 percent.  Multifamily starts were estimated to be at a 381,000 rate compared to 390,000 the previous month.

On an unadjusted basis, housing starts in August were estimated at 99,900 compared to 108,500 in July.  Single family houses accounted for 66,900 of those starts.

Housing units were completed at an annual rate of 935,000, a 6.1 percent drop from 996,000 in July and 3.3 percent higher than in August 2015.  Single family completions were estimated at 646,000 units, up 1.6 percent for the month.  Units in buildings with five or more were completed at a 283,000 annual pace, an 18.9 percent drop from July.

Unadjusted, 89,700 residential units were completed during the month, an increase of slightly less than 3,000 from July.  An estimated 57,300 of those units were single family houses. 

At the end of August there were approximately 147,000 permits outstanding under which construction had not begun, about the same number as in July.  Construction was underway on 920,000 units of residential housing; 515,000 of which were in buildings with five or more units.

Permits were issued in the Northeast at a rate 4.4 percent lower than in July and 6.8 percent below a year earlier. Housing starts were down 33.7 percent from the previous month and up a slight 0.9 percent from August 2015. Unit completions were 18.8 percent lower in both July and for the same period in 2014.

In the Midwest there was a 2.9 percent increase in permitting in August when compared both to July and the previous year.  Starts were down both for the month and year-over-year at 9.8 percent and 12.8 percent respectively. Completions fell 14.5 percent compared to July and 9.3 percent from a year earlier.

The South saw a 2.4 percent bump up in permitting month-over-month and the annual rate increased by 10.1 percent. Housing starts rose by 7.1 percent month-over-month and 22.9 percent on an annual basis. Completions fell by 9.3 percent from a month earlier but were 2.7 percent above the level a year earlier.

Permits increased in the West by 9.6 percent for the month and 36.4 percent on an annual basis.  Housing starts eased down 1.1 percent but were still 28.2 percent higher than a year earlier.  Completions jumped up by 13.2 percent from July and 25.8 percent from the previous August.