“After two months of gains, the housing market gave back a bit in August,” said Ed Brady, chairman of the National Association of Home Builders (NAHB) and a developer and builder from Illinois. “However, with builders reporting low inventory levels and rising confidence, we expect more consumers will return to the market in the months ahead.”
Combined single- and multi-family starts in August actually increased in three of the four regions measured, according to information from NAHB. However, the Southern region dipped 14.8%, overshadowing the Northeast, Midwest and West’s respective 7.6%, 5.6% and 1.8%, gains.
“The August reading represents a one-month blip in what has been a long-term, gradual recovery,” Dietz said. “On a year-over-year basis, single-family starts are up 9% while multi-family construction continues to level off at a solid level as that sector seeks to find a balance between supply and demand.”
At the same time as housing starts reportedly took a step back, builder confidence in market conditions regarding newly built, single-family homes spiked six points this month to 65, compared to August’s revised measure of 59, according to information from the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) also recently unveiled. This represents the highest HMI level since October of last year.
All three components of the HMI rose in September, according to the report. Current sales expectations rose six points to 71, the gauge charting expected sales over the next six months increased five points and also hit 71, and the index measuring the traffic of prospective buyers rose four-points to 48. A measure of 50 indicates more builders view conditions as good than poor, according to information from the NAHB.
“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” Brady said in a statement. “The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017.”
NAHB Chief Economist Robert Dietz said there are a lot of factors in plays, but familiar obstacles continue to dampen potential.
“With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them,” Dietz said. “Though solid job creation and low interest rates are also fueling demand, builders continue to be hampered by supply-side constraints that include shortages of labor and lots.”
In addition to a drop in housing starts, August also experienced a dip in privately-owned housing competitions. The August rate of 1,043,000 completions is 3.4% lower than July’s 1,080,000. However, the completion rate is fully 8.3% above August of 2015’s 963,000 completions.
More information from U.S. Census Bureau can be found here.