Housing starts inch higher in August

We just got the latest data on home construction. Here’s a recap of what they showed:

* Overall housing starts climbed 1.5% to a nine-month high of 598,000 in August from 589,000 in July. That was exactly in line with the average forecast of economists. Building permit activity rose 2.7% to a seasonally adjusted annual rate of 579,000 from 564,000. Expectations were for a reading of 583,000.

* By property type, single family construction activity fell 3%. Multifamily construction surged 25.3%. Single family permits dipped 0.2%, while multifamily permits rose 15.8%.

* Regionally, starts were mixed. They fell 2.4% in the South and remained unchanged in the West. Starts jumped 23.8% in the Northeast and inched up by 0.9% in the Midwest. Building permits were also a mixed bag. Starts rose 7.2% in the South and 14.3% in the Northeast. But they dropped 5.6% in the West and fell 5.7% in the Midwest.

Housing starts rose to the highest level in nine months in August. But in a shift from the recent trend, the improvement was driven by the multifamily sector. Core single-family starts and permitting activity both dipped. The regional breakdown was a mixed bag, with strength in some areas and weakness in others.

We’ve come a long way in a short period of time, with single-family starts up 34% in a span of just six months. So it’s no surprise to see builders take a breather. There may be some nervousness about the upcoming expiration of the first-time buyer tax credit, and we clearly have some lingering reluctance among bankers to fund construction projects. The trend toward improvement in the housing data over the longer-term, however, remains intact.

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