Housing starts experienced an eye-catching increase in August, per the latest findings from the U.S. Census Bureau, 9.6% higher overall compared to last month, with single-family constructions up a sharp 15.8%.
Privately-owned housing starts were at an annualized rate of 1.36 million during the month, while units authorized by building permits were at 1.48 million.
Construction has been at a low point the last couple of months. May saw the lowest levels for starts since 2020, with 1.27 million starts under construction. July was also a low point (1.24 million units), attributed in part to seasonal factors (including Hurricane Beryl).
Danushka Nanayakkara-Skillington, assistant vice president for forecasting and analysis at the National Association of Home Builders, put the results in context of looming policy action by the Federal Reserve:
“With the Federal Reserve expected to begin the first of a series of rate reductions today, the loosening monetary policy over the coming months will boost new home building by lowering the construction loan rates for builders. The rise in single-family permits is further good news for the industry, which was hit hard by tight monetary policy in the first half of this year.”
Building permits, though, were only up month-over-month (from 1.41 million in July to 1.48 million in August). Permits have declined from where they were in August 2023 (1.76 million).
Similarly, while overall housing completions were up month-over-month and year-over-year, single-family housing completions were down from July.
Commenting on the results, Bright MLS Chief Economist Lisa Sturtevant noted potential consequences of this permit lag: “The delivery of new homes in 2025 could be lower than it was in either 2023 or 2024 when new housing construction, particularly apartment construction, was strong. In August, the number of permits issued for the construction of units in buildings with five or more units was down 15.5% year-over-year while single-family permits were down by just 0.5%.”
Sturtevant called the results “promising” overall, attributing it—like Nanayakkara-Skillington—to increased confidence from homebuilders due to lower mortgage rates and an expected interest rate cut by the Federal Reserve. However, she also said that “(t)here is no magic bullet and no short-term fixes for increasing the housing supply…(t)here is a structural housing shortfall in the U.S. of between 1.5 million and 5.5 million housing units, depending on the source. A lack of supply is the primary driver of high home prices and worsening affordability in the U.S.”
Carl Harris, chairman of the National Association of Home Builders, also delivered tempered optimism. Citing “several supply side challenges,” Harris said that “builders continue to face a challenging environment due to rising construction costs.”
Regional breakdown
Of the four major U.S. regions, the Northeast saw the greatest uptick in single-family housing starts. On a seasonally adjusted basis, starts rose in the Northeast by 47.4% from July to August and by 52.7% year-over-year. Combined multifamily and single-family starts, though, declined in the Northeast by 27.3% from July to August.
Among the August results, this is the largest recorded regional discrepancy between an increase in starts based on unit type—suggesting construction is ongoing in the Northeast, but builders are not focusing their efforts on multifamily properties. Indeed, on a seasonally adjusted basis, the Northeast also posted the highest regional increase in single-family building permits (10.2% higher in August than July, though only 3.5% for all types of units).
Across the other major U.S. regions, the Midwest saw a monthly increase of 11.6% (for single-family starts) and 29.6% (for all types of starts). Building permits in the Midwest showed consistent growth (up 6% month-over-month for single-family units, and 12.5% for all types of units).
Like the Northeast, the South saw a greater increase in single-family construction than general construction. However, both results for the South showed positive growth (single-family starts were up 18.9%, starts of all units were up 15.5%). Building permits in the South, though, grew more for all unit types (6%) than for single-family units (1.6%).
The West saw the most modest increases, with single-family starts up 2.8% and all starts up 5.9%. The West was also the only region that posted negative growth for building permits month-over-month, specifically citing a 1.6% decline in all unit types from July to August. Single-family unit building permits, though, were up by 2% in the West.
Read the full report here.
