Single-Family Groundbreakings Fuel Home Builder Optimism

Single-Family Groundbreakings Fuel Home Builder OptimismConstruction starts for U.S. single-family homes rose in August and permits for future groundbreakings are at a five-year high, data that shows the housing market recovery is not faltering.
The Commerce Department said on Wednesday that single-family starts surged 7.0 percent to an annual rate of 628,000 units last month, the highest level in six months. Single-family homes are by far the largest segment of the housing market.
In contrast, construction of multifamily buildings slowed following a rebound in the previous month. Groundbreaking for apartments and condominiums fell 11.1 percent.
That number skewed the overall data for housing starts to an 891,000-unit pace, far less than the 917,000-unit rate economists had expected.
Higher mortgage rates have slowed the pace of home sales, but new-home buyers are moving off the sidelines out of concerns that rates may go even higher.
“Overall, this is an encouraging report as builders are seeing pent-up demand begin to be released for single-family homes despite headwinds such as rising mortgage rates and tight credit conditions,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.
Overall building permits — an indicator of future building activity — declined 3.8 percent to 918,000 units in August. This was due entirely to a pullback in the multifamily sector, where permits fell 15.7 percent to 291,000 units.
Single-family permits posted a 3 percent gain to 627,000 units – the best pace since May of 2008.
“Today’s report is reflective of gradual improvement in buyer confidence in the overall market and our recent surveys that indicate a solid outlook for single-family production,” said NAHB Chief Economist David Crowe.

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