Housing starts continued to fall in August, dropping to a seasonally adjusted annual rate of 1.307 million, down 8.5% compared with July, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Compared with August 2024, housing starts were down 6%. The decrease comes as builders are grappling with economic uncertainty, increased inventory and slowing sales due to lack of affordability.
Starts of detached single-family homes in August were at a rate of 890,000, a decrease of 7.0% compared with July.
Starts of multifamily homes (five units or more per building) were at a rate of 403,000, a decrease of 11% compared with July.
Building permits also slowed. They were at a seasonally adjusted annual rate of 1.312 million, down 3.7% compared with July and down 11.1% compared with a year ago.
Permits for single-family homes were at a rate of 856,000, down 2.2% compared with July.
Permits for multifamily dwellings were at a rate of 403,000 in August, down 6.7% compared with the previous month.
Housing completions as of August were at a seasonally adjusted annual rate of 1.608 million, an increase of 8.4% compared with July but down also 8.4% compared with August 2024.
“Housing affordability is hurting buyer traffic for builders, and as a result builders have slowed single-family home construction,” says Buddy Hughes, chairman of the National Association of Home Builders (NAHB), in a statement. “Nonetheless, our latest survey shows builders reported an increase for future market expectations as mortgage rates have posted a modest decline in recent weeks.”
“Housing starts and building permits slumped in August, with both figures underperforming consensus estimates,” says Odeta Kushi, deputy chief economist for First American, in a statement. “Single-family starts dropped to their lowest level since July 2024, while single-family permits fell to the lowest since March 2023, erasing last month’s gains.”
“Single-family construction is trending lower as builders work to balance elevated inventories with softer demand, pressured by affordability challenges and improved re-sale supply,” Kushi says. “Meanwhile, single-family permits continue to signal pressure on building activity.”
“This downturn aligns with persistent weakness in builder sentiment, which has remained in negative territory for 17 consecutive months, recently stabilizing, but still at subdued levels,” she adds. “Builder sentiment held steady at 32 in September, reflecting ongoing pressure from elevated construction costs, affordability challenges, and economic uncertainty.”
Photo: Kier in Sight Archives