Housing starts spiked 12.3% in August to a seasonally adjusted annual rate of 1.364 million and the pace for July was revised downward, according to the Department of Housing and Urban Development and the Department of Commerce.
August’s housing starts are now 6.6% above last year’s rate of 1.279 million.
Low mortgage rates and the strong job market convinced homebuilders to ramp up production in August. Housing starts surged to the fastest pace since 2007, as both single-family and multifamily segments saw sizable gains, said Mortgage Bankers Association Vice President of Economic and Industry Forecasting Joel Kan.
“Even more noteworthy was the fact that single-family starts saw their strongest month since January,” Kan said. “Permits for new single-family construction increased for the fourth straight month, which is positive sign for prospective homebuyers and the housing market.”
Single-family starts rose 4.4% from last month to 919,000 units while multifamily starts surged 30.9% to 424,000 units, according to the report.
Single-family completions increased 3.7% to a rate of 945,000, while multifamily completions slid 0.9% to 338,000.
Overall, permits rose 7.7% to a seasonally adjusted annual rate of 1.419 million. Single-family permits increased 4.5% to 866,000 and multifamily permits grew 14.9% to 509,000.
“Finally, some clearly good news in home building, with August building permits and housing starts topping the numbers in July by 12.3% and 7.7% respectively,” said Navy Federal Credit Union Economist Robert Frick. “These are the best numbers in more than a decade and show a great jobs situation combined with good raises, high consumer optimism and low mortgage rates for the foreseeable future have spurred the home building industry.”
“Those factors are already being felt in demand for new homes, which has builder sentiment rising,” Frick said. “However, the stock of new homes priced under $300,000, what half of new home buyers need before they can afford a purchase, continues to be low, and the pace of home building remains significantly below historical averages.”