The Commerce Department reported(.pdf) that housing starts and permits for new construction were less than expected last month, though the weakness was centered in the volatile multi-family home category as single-family home building increased.
Overall housing starts rose 0.9 percent, from a downwardly revised annual rate of 883,000 units in July to 891,000 units in August, while building permits dropped 3.8 percent, from an upwardly revised rate of 954,000 to 918,000. Both readings were far below the consensus estimate and, if not for the downward revision to July data, housing starts would have declined last month rather than posting a modest gain.
Multi-family housing starts tumbled 11.1 percent to a 263,000 unit pace after a sharp 28.7 percent gain. Meanwhile, groundbreaking for single-family homes jumped 7.0 percent in August to a rate of 628,000 units, the biggest monthly increase since February.
The decline in building permits was driven by a 15.7 percent drop in the multi-family sector to a rate of 291,000 units as permits for single-family homes rose 2.9 percent to a 627,000 rate, the highest level since May 2008.
Clearly, rising interest rates are having an impact on multi-family home construction, however, it is unclear why building activity for single-family homes is now surging.