Residential construction surged in August, surpassing all expectations, according to the latest Census Bureau data. In the South, construction activity was particularly strong, representing over half of the nation’s total.
- Building permits in the region jumped 6% from July to 819,000, the highest level since April, and accounted for 55% of all permits nationwide.
- Single-family permits in the South increased slightly by 1.6%, reaching 574,000, the highest since May.
Housing starts in the South surged 15.5% to 745,000 in August, though this was still the fourth-lowest level of the year. Single-family starts rose 19% to 547,000, making a strong comeback, though still the second-lowest level seen in 2023.
Housing completions in the South skyrocketed by 22.8% to 1.1 million, the highest since March 2006 and representing 61.1% of all completions nationwide. However, single-family completions in the region dropped 6.4% to 601,000, the lowest since March.
Nationally, building permits rose 5% to a seasonally adjusted annual rate of 1.47 million, the highest since March and far exceeding predictions of a modest 0.2% rise.
- Housing starts increased by 9.6% to 1.35 million, marking the highest level since April and well above the forecasted 2.2% gain.
- Meanwhile, housing completions jumped 9.2% to 1.78 million, the highest since January 2007.
Good Sign: This sharp rise in construction activity signals a potential rebound in the housing market after months of sluggishness. Builders are responding to pent-up demand, particularly in the South, where housing shortages have been acute. However, the mixed results in single-family home construction, despite the overall surge, highlight lingering challenges in the sector.
Bottom Line: The August gains could alleviate some pressure on the housing supply, especially as demand has the potential to rise with falling rates. However, with interest rates still high compared to recent levels, the sustainability of this construction uptick remains in question.
