A surge in multi-family construction boosted housing starts 12.2% month-over-month in August, an unexpected jump, according to the latest Commerce Department report. But overall the housing market is still facing pressure from high rates and high prices as well as ongoing supply chain bottlenecks, which are pushing material prices higher.
Housing starts were hit an annualized rate of 1.575 million units in August of 2022, beating market expectations of 1.445 million. Single-family housing starts were up 3.4% to 935 thousand and starts for units in buildings with five units or more were up 28.6% to 621 thousand.
Starts were higher in the Midwest (19.3% to 167 thousand), the South (24.5% to 885 thousand), and in the West (1.1% to 361 thousand) but fell in the Northeast (-17.3% to 162 thousand).
Permits for future homebuilding in August dropped 10.0% to a rate of 1.517 million units, the lowest level since June 2020, signaling the slowdown is ongoing. Single-family building permits dropped 3.5% to a rate of 899,000 units, the lowest level since June 2020. Permits for housing projects with five units fell 18.5% to a rate of 571,000 units.