After a promising series of starts and completions at the beginning of the summer, residential construction slowed in August. This is an unwelcome piece of news for economists, real estate professionals and buyers alike.
Housing starts in August dipped 0.8 percent to a rate of 1,180,000, according to the latest New Residential Construction report by the U.S. Department of Housing and Urban Development and U.S. Census Bureau. Starts for single-family homes increased slightly over July (1.6 percent) to a rate of 851,000.
Housing completions dipped 10.2 percent month-over-month to 1,075,000. Single-family completions were at a rate of 724,000 — 13.3 percent below July’s rate of 835,000.
National Association of Realtors Chief Economist Lawrence Yun says August’s report was disappointing, and he expects the following months to be just as weak due to the aftereffects of Hurricanes Harvey and Irma.
“Following August’s decline in new home construction, there will no doubt be a further temporary setback to housing starts in upcoming months due to the impacts of Hurricanes Harvey and Irma on Texas and Florida, respectively,” said Yun in an emailed statement.
“The shortage of labor in construction will further intensify as more workers concentrate on rebuilding rather than on new construction. The nation’s housing shortage unfortunately looks to be with us well into the next year.”
Building permit data looked a bit more promising. August privately-owned housing permits were at a seasonally adjusted rate of 1,300,000 — a 5.7 percent month-over-month increase from July, and an 8.3 percent year-over-year increase from the August 2016 estimate of 1,200,000.
Single-family housing permits were at a rate of 811,000, a 1.5 percent month-over-month increase from July’s revised rate of 812,000.
About the report
The metrics in the New Residential Construction report measure new, privately owned housing units, excluding manufactured (mobile) homes. The U.S. Census Bureau and HUD collect the data from the Building Permits Survey and from the Survey of Construction, which is partially funded by HUD.
The Building Permits Survey produces estimates of the number of permits issued for new housing units based on a mail survey of a sample of permit offices. The Survey of Construction produces monthly estimates of housing starts and completions; Census Bureau field representatives sample individual permits within a sample of permit offices and then interview the builders or owners who took out the sampled permits to obtain start and completion dates, as well as sale dates and characteristics, such as size and number of bedrooms.
Field representatives also drive roads looking for new residential construction activity in land areas where building permits are not required.