Housing Starts, Building Permits Crush Forecasts for August

New Residential Construction Far Stronger than Expected, Reflecting Builder Confidence

The U.S. Census Bureau reported stronger than expected new residential construction statistics for August, with housing starts and building permits both beating the forecasts. The report is released jointly with the U.S. Department of Housing and Urban Development (HUD).

Housing Starts

Privately‐owned housing starts came in at a seasonally adjusted annual rate of 1,364,000 in August. That’s a 12.3% (±10.2%) gain from the upwardly revised July estimate of 1,215,000 and a 6.6% (±11.6%)* increase from the August 2018 rate of 1,279,000.

Forecasts for housing starts ranged from a low of 1.209 million to a high of 1.275 million. The consensus forecast was 1.251 million.

Single‐family housing starts came in at a rate of 919,000 in August, which is 4.4% (±10.3%)* higher than the revised July figure of 880,000. The rate for units in buildings with five units or more was 424,000.

Building Permits

Privately‐owned housing units authorized by building permits came in at a seasonally adjusted annual rate of 1,419,000. That’s a 7.7% (±1.2%) gain from the revised July rate of 1,317,000 and a 12.0% (±1.6%) gain from the August 2018 rate of 1,267,000.

Forecasts for building permits ranged from a low of 1.274 million to a high of 1.336 million. The consensus forecast was 1.300 million.

Single‐family authorizations came in at a rate of 866,000, or 4.5% (±0.8%) higher than the revised July rate of 829,000. Authorizations of units in buildings with five units or more came in at a rate of 509,000.

Housing Completions

Privately‐owned housing completions in August were at a seasonally adjusted annual rate of 1,294,000. This is 2.4% (±11.5%)* above the revised July estimate of 1,264,000 and is 5.0% (±11.2%)* above the August 2018 rate of 1,232,000.

There is no consensus forecast for housing completions.

Single‐family housing completions in August were at a rate of 945,000, which is a 3.7% (±10.5%)* gain from the revised rate of 911,000 in July. The rate for units in buildings with five units or more was 338,000.

Previewing Next Month

On Tuesday, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) showed builder confidence hit the highest level for 2019 in September.

Homebuilder sentiment has held in the mid- to upper 60s since May, though housing starts and the new residential construction report were only inching marginally higher.

The 68 reading for September matched the highest level since last October.

While this new residential construction report lags the index by a month, the HMI for September bodes well for the housing report covering September.

*The 90 percent confidence interval includes zero. In such cases, there is insufficient statistical evidence to conclude that the actual change is different from zero