Plummeting Housing Starts Data Not as Scary as it Looks from Elaine Golden-Gealer

housing-forecastHousing starts ‘plummeted’ in August the Census Bureau said today, falling 14.4 percent from the revised seasonally adjusted annual rate of 1,117,000 units in July to 956,000 units.  The abrupt change, however was driven by a 31.5 percent decline in initial construction of buildings containing 5 or more units.  Single-family construction starts were down only 2.4 percent.  Not only that, but last month’s numbers were revised significantly higher.

The August New Residential Construction report, jointly issued by Census in conjunction with the Department of Housing and Urban Development, revised the July housing starts upward from the original 1,093,000 annual pace reported last month, already a 15.7 percent increase over June.  Despite the decrease in starts in August, the seasonally adjusted number was still 8.0 percent higher than the rate of 885,000 units reported in August 2013.

“Bottom line, today’s report was actually pretty good,” said Mortgage News Daily COO Matt Graham, “certainly not as bad as the headline might make it seem.  Multifamily stats have been a volatile contributor to the data.  They made several weaker reports look stronger and now the opposite.  I’d personally focus on the fact that Single Family Starts were only down 2.4 percent from a really stellar reading in July.  In fact July was the 3rd highest month since the crash and today’s report is the 5th highest.”

Single-family starts in August were at an annual rate of 643,000 compared to 659,000 (revised from 656,000) in July and was 4.2 percent above the 617,000 starts a year earlier.  Multifamily starts dropped from an annual rate of 444,000 in July to 304,000 in August and were 19.2 percent below the annual rate the year before.

On a non-seasonally adjusted basis there were 86,000 housing starts in August compared to 102,800 in July.  Single family starts were down from 61,900 to 58,800 and construction of units in buildings with five or more fell from 39,700 units to 26,400.

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