September single-family housing starts reached highest level since 2007

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Single-family housing starts soared in September, a new report from the U.S. Census Bureau shows, despite an overall rate that was dragged down by a decline in multifamily starts.

Privately owned housing starts in September rose to an annual rate of 1.415 million, 1.9% above the revised August estimate of 1.388 million and 11.1% above the September 2019 rate of 1.274 million, the Bureau said. Single-family housing starts in September were at an annual rate of 1.108 million, which is 8.5% above the revised August figure of 1.021 million, and a level not seen since 2007, Doug Duncan, chief economist at Fannie Mae, said.

“While starts were up 10.4% from a year prior, the somewhat modest month-over-month change was due to largely offsetting trends in single-family and multifamily starts,” Duncan said. “The former rose 8.5% over the month to 1.1 million annualized units, a level not seen since 2007. In contrast, multifamily starts fell 16.4%, to one of the slowest monthly paces since 2013, not including this past April.”

Mortgage Bankers Association Senior Vice President and Chief Economist Mike Fratantoni noted that single-family permits jumped 24.3% from a year ago.

Builders are gearing up for an even faster pace in the months ahead, which is welcome news for households wanting to buy a new home,” Fratantoni said. “The housing market is being constrained by the lack of inventory, with both new and existing homes being sold faster than new listings are arriving.”

Privately owned housing units authorized by building permits in September continued to rise as well, at an annual rate of 1.553 million, 5.2% above the revised August rate of 1.476 million and 8.1% above the September 2019 rate of 1.437 million.

Single-family authorizations in September were at a rate of 1.119 million, which is 7.8% above the revised August figure of 1.038 million.

“We expect the divergence between single-family and multifamily starts to continue,” Duncan said. “Low-interest rates, a tight supply of existing homes for sale, and a trend in some metro areas toward purchasing homes in suburban areas has led to strong demand for new single-family homes. Furthermore, this strong sales pace has gotten ahead of available units.”

“This persistent demand should be and largely is music to builders’ ears – a measure of homebuilder confidence hit a record high in September, and has since risen further – but instead of a consistent and strong acceleration in building activity, construction levels have settled into a pattern of more-modest growth,” Zillow Economist Matthew Speakman said. “The longstanding regulatory and supply-side constraints faced by builders are forcing them to be more selective in the projects they take on.”