Apartments and Condos Lift Housing Starts

Total housing starts increased 3.9% in August due to the strength of multifamily development.

That sector, which includes for-rent apartment buildings and condos, recorded a 539,000 annual rate for 2+ unit construction. After posting a slight decline in 2020, 5+ unit production is up 16.6% on a year-to-date basis. However, the “missing middle,” 2- to 4-unit production is approximately flat for the year (0.8% gain on a year-to-date basis).

Single-family starts were down 2.8% for the month while overall multifamily starts were up 21% in August, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The August figure of 1.62 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts came in at a 1.08 million seasonally adjusted annual rate. Single-family housing starts are up 23.8% on a year-to-date basis; however, the numbers are distorted by the weak readings of the Summer of 2020.

Single-family builder confidence ticked up one point to a level 76 on some easing for material prices, according to the National Home Builders Association/Wells Fargo Housing Market Index (HMI). After peaking at a level of 90 last November, builders report growing concerns over increasing lumber and other construction costs, as well as delays in obtaining building materials.