As summer comes to a close, hoped-for long-term improvements continue to elude the residential building industry. Following three consecutive months of promising increases beginning in May, single-family housing starts, completions, and permits fell in August. Could it be the start of a seasonal decline, or does it signal longer-term trouble for the single-family new-construction segment?
According to data released September 17 by the U.S. Census Bureau and the Department of Housing and Urban Development, August permits for single-family homes fell 0.2 percent below July's revised rate of 463,000. Permits for units in buildings with five or more units rose to 98,000 in August, a slight improvement over July's rate, but still well below that of June. Overall, building permits for privately owned residential units rose by 2.7 percent over July's rate; this is still 32.4 percent below August 2008.
After increasing in July to 494,000, single-family housing starts dropped 3 percent, to a rate of 479,000, in August. Starts for units in buildings of five units or more increased to 115,000 in August, while overall starts of privately owned housing rose 1.5 percent over July's rate.
Single-family housing completions in August fell 1.6 percent below July's revised rate of 497,000, and completions of units in buildings of five units or more dropped 12.3 percent. Overall completions of privately owned housing units declined 5.5 percent over July's rate and remains 25.3 percent below completions in August 2008.
The American Institute of Architects' latest Architecture Billings Index (ABI) shows that demand for design services also has diminished, following a promising uptick in July that marked a six-point rebound from the previous month. August's ABI rating was 41.7, compared to 43.1 in July and 37.7 in June. Any score above 50 signifies an increase in billings. The new projects inquiry score, however, has maintained a seven-month rating above 50, indicating forward progress. In August, the new projects inquiry index increased to 55.2, up from July's score of 50.3 and June's score of 53.8.