Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  Housing Starts Increased 12.2% in August
Posted Under: Data Watch • Government • Home Starts • Housing • Interest Rates
Supporting Image for Blog Post


Implications:  Following a string of weak reports US housing starts rose unexpectedly in August, despite relatively high mortgage rates, labor shortages, and ongoing supply-chain issues.  Looking at the details, the best news was that single-family construction rose 3.4%, the first gain in six months.  Meanwhile, the majority of today’s gain came from multi-unit starts which jumped 28.0%.  It is clear developers are becoming more cautious about future demand for new single-family projects with 30-year mortgage rates now above 6.0% and are continuing to focus resources on apartment buildings instead.  Over the past year single-family starts are down 14.6% versus multi-unit starts, which are up 33.1%.  We expect starts to resume a trend downward in the next several months. Lots of homes are already in the pipeline, with the number of homes under construction at the highest level on record back to 1970.  These figures illustrate a slower construction process due to a lack of workers and other supply-chain difficulties.  In this context, it’s not surprising to see new building permits decline 10.0% in August.  The backlog of projects that have been authorized but not yet started is currently just below the record high since the series began back in 1999.  Meanwhile, homebuilder sentiment, as measured by the NAHB Housing Index, is deteriorating. The index fell for a ninth consecutive month to 46 in September.  An index reading below 50 signals that more builders view conditions as poor vs. good.  The prime concern continues to be higher mortgage rates, which are having a negative impact on potential sales as certain buyers are at least temporarily priced out of the market, leaving some builders with a surplus of inventory.  In spite of all this, do not expect a housing bust nearly as harsh as in the 2000s. Unlike the previous housing bust, we do not have a massive oversupply of homes.

Click here for a PDF version

Posted on Tuesday, September 20, 2022 @ 10:59 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.