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Housing

Housing Starts Remain Soft Ahead of Fed Meeting

Strategic Insights

— 1 min read

Challenging affordability conditions continue to weigh on the housing sector, as the National Association of Home Builders (NAHB) reported an 8.5% decrease in overall housing starts in August, reaching a seasonally adjusted annual rate of 1.31 million units. The drop in single-family starts was particularly pronounced, with a 7% decline to 890,000 units, marking the lowest reading since July 2024. Amidst these headwinds, builders remain optimistic, buoyed by the prospect of lower interest rates in the near future, as the Federal Reserve is expected to cut short-term interest rates.

Key Takeaways:

  • Overall housing starts decreased by 8.5% in August to a seasonally adjusted annual rate of 1.31 million units, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
  • Single-family starts decreased by 7% to an 890,000 seasonally adjusted annual rate, the lowest reading since July 2024, and are down 4.9% on a year-to-date basis.
  • The multifamily sector, including apartment buildings and condos, decreased by 11.7% to an annualized 417,000 pace.
  • Builders reported an increase in future market expectations due to a modest decline in mortgage rates in recent weeks.
  • The NAHB Chief Economist, Robert Dietz, noted that a reduction in the federal funds rate by the Fed will lead to lower interest rates for building and land development loans, helping builders to boost housing production.

Statistics:

  • Overall housing starts decreased by 8.5% in August.
  • Single-family starts decreased by 7% in August.
  • Multifamily starts decreased by 11.7% in August.
  • The seasonally adjusted annual rate of 1.31 million units is the lowest since summer 2024.
  • Single-family starts are down 4.9% on a year-to-date basis.
  • Multifamily permits decreased by 6.4% to a 456,000 pace.

Sources:

  • National Association of Home Builders
  • U.S. Department of Housing and Urban Development and the U.S. Census Bureau
  • Federal Reserve
  • Robert Dietz, NAHB Chief Economist
  • Buddy Hughes, NAHB Chairman

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