Housing starts overall rise, but single-family starts drop
Privately owned housing starts rose to a seasonally adjusted annual rate of 1,615,000. The August rate jumped by 3.9% from the previous month.
The August 2021 rate increased by 17.4% compared with August 2020.
However, the rate for single-family housing starts reached 1,076,000, down 2.8% from the previous month.
Permits rise 6%
Meanwhile, privately owned housing units authorized by building permits in August rose by 6.0% in July to a seasonally adjusted annual rate of 1,728,000 in August. The August rate increased by 13.5% from August 2020.
Single‐family authorizations rose 0.6% to 1,054,000. Authorizations of units in buildings with five units or more reached a rate of 632,000.
Residential construction spending
U.S. residential construction spending dipped from March-May 2020, marking the first dip since a generally down 2018.
Since last May, however, spending has enjoyed an uninterrupted rise.
According to the Census Bureau, residential construction spending reached a seasonally adjusted annual rate of $782.1 billion in July. The rate jumped from $777.9 billion in June and $618.2 billion in July 2020.
Meanwhile, lumber, for which prices skyrocketed to all-time highs earlier this year, has cooled.
The Producer Price Index for lumber peaked at 444.2 in May 2021. Since then, it has fallen to 280.1 in July. Despite the decline, the index still remains higher than its August 2020 (267.2) and August 2019 (206.9) levels.
Existing-home sales fall in August
While prospective buyers were incentivized by historically low interest rates earlier this year, ever-rising home prices in what has been a heated, undersupplied housing market have capped activity.
This year, 30-year weekly average mortgage rates fell as low as 2.65% (week ending Jan. 7, 2021). Rates bounced back up to 3.18% for the week ending April 1. Since then, they again retraced and have since then trended sideways. The weekly average for the 30-year rate reached 2.88% for the week ending today, Sept. 23.
Furthermore, existing-home sales fell by 2% in August, the National Association of Realtors reported.
Inventory of unsold homes fell by 1.5% to 1.29 million from July to August, NAR reported. That total is equivalent to 2.6 months of the monthly sales pace.
“Sales slipped a bit in August as prices rose nationwide,” said Lawrence Yun, NAR’s chief economist. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”
Many may be wondering how to set buying strategies for 2022 with so many variables in the air. The old saying goes, “Nothing kills high prices like high prices” — but does that still hold true?
In the September episode of “Spend Friends,” co-hosts Pierre and Bill welcome special guest Lisa Reisman, CEO of MetalMiner (a sister site of Spend Matters), to discuss.