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Construction of new single-family homes rebounded in August, in a welcome sign for prospective homebuyers seeking more options in a tight housing market.
Single-family housing starts were at a seasonally adjusted annual rate of 992,000 last month, up 15.7% from July’s revised figure, according to U.S. Census data released on Wednesday. Permits for single-family homes, a leading indicator of new construction, also rebounded 2.8% on the month to 967,000 annualized.
Construction starts on multi-family buildings, which are typically more volatile month-to-month, dropped 4.2% in August from July, to an annualized 364,000. Total housing starts last month were on an annual pace of 1.4 million, a 9.6% increase from the prior month.
“The pace of apartment construction has slowed as record numbers of units have been delivered over the past 12 months and rent growth has slowed,” says Bright MLS Chief Economist Lisa Sturtevant. “Slowdowns in new single-family construction over the summer reflected sagging builder confidence, but homebuilders appear to be more confident as mortgage rates have fallen over the past few weeks and as the Federal Reserve gets set to cut interest rates.”
Mortgage rates have fallen to their lowest since February 2023, with the average rate on the 30-year fixed hitting 6.2% last week, according to Freddie Mac. That’s a full percentage point lower than rates seen in May, reflecting changes in bond markets ahead of the Fed’s anticipated move to begin cutting its benchmark rate.
Fed policymakers will announce their new rate policy on Wednesday afternoon. The central bank is expected to cut its current effective benchmark rate of about 5.3% by either half a point or a quarter point.
Developing story, more to follow.