Construction of Single-Family Houses Fell Again in August

Homebuilders in the U.S. broke ground on new projects at a faster than expected pace in August—although construction of single-family homes slowed for the second consecutive month.

Many of the housing officials in the Biden administration regard single-family housing as detrimental to the climate and racial equity. They are developing plans to make it relatively more costly to maintain single-family zoning and construction new single-family homes compared with apartments and attached homes.

Homebuilders started construction at a seasonally adjusted annual rate of 1.62 million in August, a 3.9 percent increase from the previous month, the Census Bureau reported Tuesday. Economists had forecast a one percent gain from the preliminary July figure.

Both June and July’s figures were revised higher. Compared with a year ago, housing starts were up 17.4 percent.

The growth in August came in the multifamily segment. Projects with five or more units jumped 21.6 percent to a seasonally adjusted annual rate of 530,000. The building of apartments and condos has been rising but has lagged behind single-family homes as s demand shifted away from city centers scourged by rising murders, closed shopping districts, anti-police rioting, and a rise in urban blight.  The August pace, however, is the fastest since January 2020, which was the fastest pace since the mid-1980s.

Compared with August 2020, multifamily starts are up 60 percent.

The pace of single-family construction fell to an annual rate of 1.076 million from 1.107 million, a 2.8 percent decline. Building single-family homes exploded higher in the fall of 2020 but peaked in December of that year. It has since then been choppy month to month but at a higher level than prepandemic. Compared with August 2020, when the pandemic shift to suburbs was underway, single-family projects are up 5.2 percent.

Permitting, which is a forward-looking indicator of expected demand for housing, jumped six percent from July, also driven by a rise in apartments and condos.

As a share of total construction, single-family is now back to recent but prepandemic levels.

Here’s a very long-term chart of the market share of single-family house building.