Builders
started construction of privately-owned housing units
in August at a seasonally adjusted annual rate (SAAR) of 1,283,000 units (1.435
million expected).
This is 11.3% (±8.3%) below the revised July estimate of 1,447,000 (originally
1.452 million units) and 14.8% (±9.0%) below the August 2022 SAAR of 1,505,000
units; the not-seasonally adjusted YoY change (shown in the table above) was -15.1%.
Single-family
housing starts in August were at a rate of 941,000; this is 4.3% (±8.8%)* below
the revised July figure of 983,000 units (+2.1% YoY). Multi-family: 342,000
units (-26.3% MoM; -42.2% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,406,000 units. This is 5.3% (±15.1%)* above the
revised July estimate of 1,335,000 (originally 1.321 million units) and 3.8%
(±13.2%)* above the August 2022 SAAR of 1,355,000 units; the NSA comparison: +3.1%
YoY.
Single-family housing completions were at a SAAR of 961,000 units; this is 6.6% (±11.1%)* below the revised July rate of 1,029,000 units (-7.7% YoY). Multi-family: 445,000 units (+45.4% MoM; +33.2% YoY).
Total
permits were at a SAAR of 1,543,000 units (1.440 million expected). This is 6.9%
above the revised July rate of 1,443,000 (originally 1.442 million units) but 2.7%
below the August 2022 rate of 1,586,000 units; the NSA comparison: -0.6% YoY.
Single-family permits were at a SAAR of 949,000; this is 2.0% above the revised July figure of 930,000 units (+7.4% YoY). Multi-family: 594,000 units (+15.8% MoM; -11.4% YoY).
Press
release from NAHB’s Robert Dietz:
“Persistently
high mortgage rates above 7% continue to erode builder confidence, as sentiment
levels have dropped below the key break-even measure of 50 for the first time
in five months.
“Builder
confidence in the market for newly built single-family homes in September fell
five points to 45, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI). This follows a six-point drop in
August.
“The
two-month decline in builder sentiment coincides with when mortgage rates
jumped above 7% and significantly eroded buyer purchasing power. And on the
supply-side front, builders continue to grapple with shortages of construction
workers, buildable lots and distribution transformers, which is further adding
to housing affordability woes. Insurance cost and availability is also a
growing concern for the housing sector.
“Putting
into place policies that will allow builders to increase the housing supply is
the best remedy to ease the nation’s housing affordability crisis and curb
shelter inflation. Shelter inflation posted a 7.3% year-over-year gain in
August, compared to an overall 3.7% consumer inflation reading.
“As
mortgage rates stayed above 7% over the last month, more builders are reducing
home prices again to bolster sales. In September, 32% of builders reported
cutting home prices, compared to 25% in August. That’s the largest share of
builders cutting prices since December 2022 (35%). The average price discount
remains at 6%. Meanwhile, 59% of builders provided sales incentives of all
forms in September, more than any month since April 2023.
“While
more pricing-out is now occurring, the lack of resale inventory at the start of
2023 has shifted the new construction buyer mix. A special question in the
September HMI survey revealed that 42% of new single-family home buyers were
first-time buyers on a year-to-date basis in 2023. This is significantly higher
than the 27% reading from a more normalized market in 2018.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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