Housing starts climbed back to the highest pace of the year in August, reaching a seasonably adjusted annual rate of 2 million units, the U.S. Commerce Department reported.
The 2-million-unit pace, which matched the pace set in March, was 0.6 percent above July’s upwardly revised rate of 1.988 million. Total housing starts were up by 10.4 percent on a year-to-date basis.
“Builders remain confident about the market and are keeping up with strong demand for single-family homes and condominiums,” said Bobby Rayburn, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Jackson, Miss. “However, builders are managing their production schedules carefully and cutting back slightly on the number of new building permits.”
Issuance of total building permits decreased 5.5 percent from the upwardly revised July pace to a seasonably adjusted rate of 1.952 million units. However, permits are up by 10 percent on a year-to-date basis.
“The housing market recently has been buoyed by a healthy combination of strong demographics, improving employment and income growth and a downshift in long-term interest rates,” said NAHB Chief Economist David Seiders. “Naysayers talking about a housing bubble should look at the fundamentals that are in place and see that the national housing market is extremely sound.”
For the month, single-family housing starts increased 0.4 percent to a pace of 1.667 million. This was an 11.6 percent increase over the August 2003 pace. Multifamily housing starts increased to a seasonally adjusted rate of 333,000 units, 1.5 percent above the July pace, but 2.3 percent below a year earlier.
“Starts are likely to slip a bit in the fourth quarter as interest rates firm up, but it’s now clear that single-family home production will hit a new annual record in 2004,” Seiders added.
Construction of new homes and apartments increased across all regions but the West for the month.