According to the U.S. Housing and Urban Development and the Commerce Department, nationwide housing starts in the U.S. fell 5.8 percent to a seasonally adjusted annual rate of 1.14 million units in August 2016. Overall permit issuance edged 0.4 percent lower.
"After two months of gains, the housing market gave back a bit in August," said Ed Brady, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Bloomington, Ill. "However, with builders reporting low inventory levels and rising confidence, we expect more consumers will return to the market in the months ahead."
"The August reading represents a one-month blip in what has been a long-term, gradual recovery," said NAHB Chief Economist Robert Dietz. "On a year-over-year basis, single-family starts are up 9 percent while multifamily construction continues to level off at a solid level as that sector seeks to find a balance between supply and demand."
Both housing sectors posted production declines in August. Single-family housing starts fell 6 percent to a seasonally adjusted annual rate of 722,000 units while multifamily production declined 5.4 percent to 420,000 units.
Combined single- and multifamily starts increased in three of the four regions in August. The Northeast, Midwest and West posted respective gains of 7.6 percent, 5.6 percent and 1.8 percent, respectively. The South registered a 14.8 percent decline.
Single-family permits rose 3.7 percent in August to a rate of 737,000 while multifamily permits dropped 7.2 percent to 402,000.
Permit issuance increased 5.1 percent in the Northeast, 4.2 percent in the Midwest and 0.7 percent in the West. Meanwhile, the South posted a loss of 3.4 percent.
According to Realtor.com chief economist Jonathan Smoke, "Today's construction data suggests we will continue to see low vacancies in rentals fueling higher rents and a limited supply of homes for sale in the months ahead. The good news is we are seeing an important shift in permits for single-family homes, which could signal more supply on the horizon."
Smoke continued, "Multi-family construction permits are down 16 percent nationally on a year-to-date basis, and a whopping 61 percent in the Northeast so far this year, which has driven total home construction activity lower than last year.
Permits for single-family homes are up 8 percent year-to-date, and we are finally seeing the pace of single family permits exceeding starts for the first time this year. When permits are higher than starts, future starts are likely to be higher."