Single-Family Home Construction Jumps 16% in August as Lower Rates Encourage Builders

Construction of new single-family homes rebounded in August, in a welcomed sign for prospective homebuyers seeking more options in a tight housing market.

Construction of new single-family homes rebounded in August, in a welcomed sign for prospective homebuyers seeking more options in a tight housing market.Single-family housing starts hit a seasonally adjusted annual rate of 992,000 last month, up 15.8% from July's revised figure after five straight months of decline, according to U.S. Census data released Wednesday. Permits for single-family homes, a leading indicator of new construction, also rebounded 2.8% on the month to 967,000 annualized.

Construction starts on multifamily buildings, which are typically more volatile month to month, dropped 4.2% in August from July to an annualized 364,000. Total housing starts last month were on an annual pace of 1.4 million, a 9.6% increase from the prior month.

"The pace of apartment construction has slowed as record numbers of units have been delivered over the past 12 months and rent growth has slowed," says Bright MLS chief economist Lisa Sturtevant. "Slowdowns in new single-family construction over the summer reflected sagging builder confidence, but homebuilders appear to be more confident as mortgage rates have fallen over the past few weeks and as the Federal Reserve gets set to cut interest rates."