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.”
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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.”