After spiking to unsustainable highs during the disruptions to society in the past couple of years, US housing starts trended further downward in August 2023. Permits for authorizations of new home building increased, however. Demand for new construction has been boosted by an ongoing acute shortage of previously owned homes on the market. Realtors estimate that housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to bridge this inventory gap. Expectations among construction industry insiders and financial lenders alike is that single-family construction starts could rebound in the coming months, if builders are able to keep their skilled labour.
Coming off real highs in the previous two years, August total housing starts in the US fell by -11% from the previous month, to 1.283 million units, compared to the 1.447 million units reported for July 2023, and were down -15% from the August 2022 rate of 1.505 million units.
Building permits meanwhile, as an indicator of construction activity to come, continued a recent rising trend to increase by almost +7%, at 1.543 million units, from the July rate of 1.443 million. This is -3% below the August 2022 rate of 1.586 million. These permits will eventually become starts and will help to underpin residential construction.
Meanwhile, the Madison’s Lumber Prices Index for the week ending September 22, 2023 was US $448 mfbm. This is down by -1%, or -$4, from the previous week when it was US $452.
Beginning to normalize after unusual highs, housing completions rose by more than +5% from July, to an estimated annual rate of 1.406 million housing units. Units under construction remained high compared to historical averages, at 1.688 million units. Of those, 676,000 were single-family homes.
August starts of single-family housing, the largest share of the market and construction method which uses the most wood, dropped slightly, down by -4% to a rate of 941,000 units, from July’s 983,000 units. Single-family authorizations were at 949,000 units, which is +2% above the July figure of 930,000 units. Building permits are generally submitted two months before the home building is begun, so this data is as indicator of July construction activity.
See more information from the Madison Lumber Price Index here.