US August Housing Starts Surge to Highest Level Since April, Builders Weigh Inventory Against Demand Outlook
The annualized monthly rate of new home construction in the United States in August was 9.6%, higher than the expected 5.8% and the previous -6.8%. The total number of new home constructions was 1.356 million, reaching a new high since April. Builders are weighing inventory against demand prospects, with a nearly 16% increase in new single-family home projects. Mortgage rates have dropped to the lowest since 2022, supporting home sales. Despite expectations that residential construction will contribute to economic growth, third-quarter GDP is expected to decline by 0.3 percentage points. Investors favor stocks of builders, with the iShares US Home Construction ETF rising by about 20%
According to the Wisdom Financial APP, after a sharp decline in July, the number of new housing starts in the United States rebounded in August, indicating an imbalance in residential construction. Builders are weighing the relationship between inventory levels and the improved demand prospects brought about by the decline in borrowing costs.
Data released on Wednesday showed that the seasonally adjusted annual rate of new housing starts in the United States for August was 9.6%, significantly higher than the market's expected 5.8% and the previous -6.8%. The total number of new housing starts in August in the United States was 1.356 million households, also higher than the market's expected 1.31 million households and the previous 1.238 million households, reaching the highest level since April this year. The number of new single-family housing starts increased by nearly 16% to 992,000 households, the highest level in three months; while the number of new multi-family housing starts decreased for the first time since May.
Builders are waiting for continued demand recovery to help reduce the number of unsold homes. With the expectation that the Federal Reserve will soon ease monetary policy, mortgage rates in the United States have fallen to the lowest level since 2022, which is seen as supporting home sales and helping to reduce inventory.
However, it will take time to achieve sustained growth in residential construction. The GDPNow forecast released by the Atlanta Fed before the release of the August new housing starts data in the United States showed that although residential construction contributed to economic growth in the second half of 2023 and early 2024, it is expected to reduce the U.S. GDP by 0.3 percentage points in the third quarter.
Meanwhile, due to expectations of an improvement in the real estate market, investors favor U.S. homebuilder stocks. The iShares US Home Construction ETF has risen by about 20% in the past three months, reaching a historical high