Housing starts increase in August, even as single-detached housing starts decline
Housing starts in the United States broadly picked up in August, the Census Bureau reported this month.
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Overall increase in housing starts, but decline in single-detached home starts
Private housing starts rose at a seasonally adjusted annual rate of 1,615,000. August’s rate jumped 3.9% from the previous month.
The rate for August 2021 increased 17.4% from August 2020.
However, the single-family home start rate reached 1,076,000, down 2.8% from the previous month.
Permits increase by 6%
At the same time, private dwellings permitted under building permits in August rose 6.0% in July to a seasonally adjusted annual rate of 1,728,000 in August. The rate for August increased 13.5% from August 2020.
Single-family permits increased 0.6% to 1,054,000. Housing permits in buildings with five or more units reached a rate of 632,000.
Residential construction spending
Residential construction spending in the United States fell from March to May 2020, marking the first drop since a general decline in 2018.
Since last May, however, spending has grown steadily.
According to the Census Bureau, residential construction spending reached a seasonally adjusted annual rate of $ 782.1 billion in July. The rate fell from $ 777.9 billion in June to $ 618.2 billion in July 2020.
Meanwhile, lumber, whose prices hit all-time highs earlier this year, has cooled.
The lumber producer price index peaked at 444.2 in May 2021. Since then, it has fallen to 280.1 in July. Despite the decline, the index is still above its August 2020 (267.2) and August 2019 (206.9) levels.
Existing home sales drop in August
While potential buyers were enticed by historically low interest rates earlier this year, steadily rising home prices in what has been a heated and undersupplied housing market has limited activity.
This year, 30-year average weekly mortgage rates have fallen to 2.65% (week ending January 7, 2021). Rates rebounded to 3.18% for the week ending April 1. Since then they have retreated again and have since followed a sideways trend. The weekly average 30-year rate hit 2.88% for the week ending today, September 23.
In addition, sales of existing homes fell 2% in August, the National Association of Realtors reported.
The inventory of unsold homes fell 1.5% to 1.29 million from July to August, NAR reported. This total is equivalent to 2.6 months of the monthly sales pace.
“Sales edged down in August as prices rose across the country,” said Lawrence Yun, chief economist of NAR. “While there has been a decline in home purchases, potential buyers are looking but much more measured about their financial limits and just expecting more inventory.”
Many may be wondering how to define buying strategies for 2022 with so many variables in the air. The old saying goes, “Nothing kills high prices like high prices” – but is it still true?
On the September episode of “Spend Friends,” co-hosts Pierre and Bill welcome special guest Lisa Reisman, CEO of MetalMiner (a sister site to Spend Matters), for a chat.