Refile: WRAPUP 1-US single-family housing starts surge; building permits rise moderately

Comstock Holding Companies

18/09/2024 15:03

(Adds missing word "time" in second paragraph, adds missing zero
to 992,000 in fifth paragraph, )

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      Single-family housing starts jump 15.8% in August
    

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      Permits for future single-family building rise 2.8%
    

  
    By Lucia Mutikani
       WASHINGTON, Sept 18 (Reuters) - U.S. single-family
homebuilding rebounded sharply in August, but a moderate
increase in building permits suggested that the momentum was
unlikely to be sustained against the backdrop of a rising supply
of new homes on the market.
    The jump in single-family housing starts reported by the
Commerce Department on Wednesday probably reflected the fading
drag from Hurricane Beryl, which had depressed homebuilding in
the South, mostly in Texas. Homebuilders could also face a
challenge from increasing inventory of previously owned homes
for sale, with the Federal Reserve expected to cut interest
rates on Wednesday for the first time since 2020. 
    Many home owners have mortgage rates below 4% and higher
mortgage rates had deterred many from listing their houses. The
so-called "rate lock" starved the housing market of supply,
creating an opportunity for builders.
"A renewed dip in single-family construction activity is likely
over the next few months as homebuilders seem to have responded
too aggressively to the slight upturn in new home sales in 2023,
and are now left with an excessive level of inventory," said
Oliver Allen, senior U.S. economist at
Pantheon Macroeconomics. "Lower mortgage rates will help boost
demand for new homes at the margin."
    Single-family housing starts, which account for the bulk of
homebuilding, surged 15.8% to a seasonally adjusted annual rate
of 992,000 units last month, the Commerce Department's Census
Bureau said. Data for July was revised higher to show starts at
a rate of 857,000 units instead of the previously reported
851,000 pace. 
    Single-family home building had declined for five straight
months after a surge in mortgage rates in spring weighed on home
sales, resulting in excess supply of newly built houses. 
    Mortgage rates have since retreated to 1-1/2-year lows.   
    A National Association of Home Builders survey on Tuesday
showed homebuilder sentiment improved marginally in September
after sliding for four consecutive months, but noted "builders
will face competition from rising existing home inventory in
many markets as the mortgage rate 'lock-in' effect softens with
lower mortgage rates."
     
    MORE HOUSES ON THE MARKET
    New housing supply is near levels last seen in early 2008.
Permits for future construction of single-family homes increased
2.8% to a rate of 967,000 units in August.
    Starts for housing projects with five units or more dropped
6.7% to a rate of 333,000 units in August. Overall housing
starts jumped 9.6% to a rate of 1.356 million units. Economists
polled by Reuters had forecast starts increasing to a rate of
1.310 million units.
    Single-family starts vaulted 18.9% in the densely populated
South, where activity was likely weighed down by Hurricane Beryl
in July. Starts soared 47.4% in the Northeast and increased
11.6% in the Midwest, which is considered the most affordable
region. Homebuilding rose 2.8% in the West. 
    Single-family starts increased 5.2% from a year ago. 
    Multi-family building permits rose 8.4% to a rate of 451,000
units. Building permits as a whole advanced 4.9% to a rate of
1.475 million units.
    The number of houses approved for construction that were yet
to be started increased 1.4% to 285,000 units. The single-family
homebuilding backlog rose 2.8% to 148,000 units, the highest
level since April 2020. The completions rate for that housing
segment dropped 5.6% to 1.029 million units.
    Overall housing completions increased 9.2% to a rate of
1.788 million units. The number of housing units under
construction declined 1.9% to a rate of 1.509 million units, the
lowest level since November 2021. 
    The inventory of single-family housing under construction
dipped 0.3% to a rate of 642,000 units.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
((mailto:Lucia.Mutikani@thomsonreuters.com))