After seeing some ground gained in July, housing starts in August have dropped once again, nearly falling in line with June’s housing numbers (941,000 to 935,000). Despite mortgage rates dropping to their late 2022 peak, the combination of high interest rates, high pricing, and limited inventory has continued to plague the housing market.
According to housing data released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development housing starts, overall, has dropped to a rate of 1,283,000, down 11.3% from July and down 14.8% from August 2022. Meanwhile, housing containing five units or more were at a start rate of 334,000 in August, down 26.3% from July, and down 41% from last year.
It’s not all doom and gloom, however, as apart from starts, every other statistic is up compared to July (though they all remain down compared to last year except for housing completions).
Privately‐owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,543,000, which is 6.9% above the revised July rate of 1,443,000 but 2.7% below the August 2022 rate of 1,586,000.
Single‐family authorizations in August were at a rate of 949,000 (2.0% above the revised July figure of 930,000). Authorizations of units in buildings with five units or more were at a rate of 535,000 in August (up 14.8% from July but down 17.7% compared to last year).
Privately‐owned housing completions in August were at a seasonally adjusted annual rate of 1,406,000. This is 5.3 percent (±15.1 percent) above the revised July estimate of 1,335,000 and is 3.8 percent (±13.2 percent) above the August 2022 rate of 1,355,000.
Meanwhile, single‐family housing completions in August were at a rate of 961,000; this is 6.6 percent (±11.1 percent) below the revised July rate of 1,029,000. The August rate for units in buildings with five units or more was 433,000.
Looking elsewhere, the numbers don’t seem to be too much better. The National Association of Home Builders (NAHB) Housing Market Index dropped 10% moving into September, moving from 50 to 45.
The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. The 10% drop reflects homebuilder sentiment that homebuyer traffic is in a deep recession.
“Despite higher demand for new construction stemming from a lack of resale inventory, home builders are feeling pessimistic about the housing market because of elevated mortgage rates hovering above 7%,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis.
However, a drop of sunshine for integrators might be offered by Kelly Mangold, Principal of RCLCO Real Estate Consulting, who sees that while nobody is buying a new house, people are still looking to upgrade what they already have.
“The combination of high interest rates, high pricing, and limited inventory has continued to plague the housing market,” Mangold comments. “Housing mobility is down as many owners who might typically have sold have decided to stay and upgrade their existing homes instead of purchasing a larger or more well-appointed move-up model.”
This mirrors reports from the National Kitchen & Bath Association earlier this year, which speculated that renovations would become the main driver of business for professionals in the industry.
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