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August Housing Starts Drop to 3-Month Low as Multi-Family Units Plunge

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August Housing Starts Drop to 3-Month Low as Multi-Family Units Plunge

US housing starts declined to a three-month low in August amid a sharp drop in multi-family projects as homebuilders grappled with higher financing and material costs.

Starts were down 2.6% sequentially to a seasonally adjusted rate of 1.28 million units last month, the lowest level since May, the Census Bureau and the Department of Housing and Urban Development said Thursday. The consensus was for a 6.7% increase to 1.32 million in a survey compiled by Bloomberg, based on an unrevised July reading.

The figure for July's housing starts was upgraded to 1.31 million, according to the data.

Starts on buildings with at least five units slumped 23% month on month to 344,000 units in August, the lowest its been since May. The single-unit component rose 7.6% to 918,000 units, the highest level since March.

The Mortgage Bankers Association said Wednesday that mortgage applications declined last week as the rate for 30-year fixed mortgages with conforming loan balances jumped to its highest since May 2025. Crude oil rallied past $100 a barrel this month amid intensifying hostilities in the Middle East, while diesel prices in the US has hit record highs.

Homebuilders face elevated fuel and material costs, along with labor shortages and higher financing costs, TD Economics Economist Andrew Foran said in a note.

"Cumulatively, we expect these headwinds to keep homebuilding activity subdued over the coming months," Foran said.

Building permits decreased 2.7% to 1.39 million units last month, worse than the 1.5% decline estimated by the Street. Authorizations of buildings with five or more units retreated 3.1%, while those with single units were down 1.8%, government data showed.

"With permits falling across both segments, starts are likely to see further moderation in the months ahead," Foran wrote.

On Wednesday, the National Association of Home Builders and Wells Fargo said homebuilder confidence hit a 12-month low in September due to higher mortgage rates and material costs. Last week, the National Association of Realtors said August existing home sales in the US hit the lowest level since June 2025 amid persistent affordability headwinds.

Homebuilder Lennar (LEN) reported weaker-than-expected fiscal third-quarter results on Wednesday as affordability challenges slowed home-buying activity.

Price: $78.40, Change: $+0.04, Percent Change: +0.05%

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