U.S. Housing Starts and Permits (August 2024)

Homebuilding activity ticked up in August

• Housing starts rose 9.6% month-on-month (m/m) in August to 1.36 million (annualized) units, coming in above the consensus forecast of 1.32 million. Revisions to the data for the two prior months were negligible.
• The increase in housing starts was solely driven by the single-family segment which rose 15.8% m/m (or 135k units), while multi-family starts fell 4.2% m/m (or 16k units).
• Residential permits rose 4.9% m/m to 1.48 million annualized units. Single-family permits rose 2.8% m/m, marking a second consecutive month of improvement, while multi-family permits increased by 9.3% m/m.
• Among the four Census regions, only the Northeast recorded a decline in housing starts (-27.3% m/m), after two months of double-digit monthly growth. Increases were seen in the Midwest (+29.6% m/m), the South (+15.5% m/m), and the West (+5.9% m/m), all reversing the prior month's declines.

Key Implications

• Homebuilding activity picked up in August, rising above its year-ago level for the first time in four months thanks to a jump in single-family starts. The slowdown seen over the past few months has pushed the number of housing units under construction down 11% year-on-year in August. This has primarily been driven by the multi-family segment as the prior build-up in the supply pipeline has kept completions elevated. The number of single-family units under construction has also fallen over the past five months as elevated rates restrained demand, but the rebound in starts and permits shows that the segment may have found a bottom.
• Homebuilder sentiment remained subdued in September but did rise modestly as expectations for future sales improved. This was primarily driven by the fact that mortgage rates have fallen by roughly half a percentage point since the end of July and now sit at their lowest level in eighteen months. Combined with the expectation for rates to fall further moving forward, as the Federal Reserve prepares to cut interest rates for the first time in over four years later today, sentiment and homebuilding activity are likely to rise further moving into 2025.  

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