Housing Starts ~ August 2022

Housing Starts and Permits are reported monthly by the U.S. Census Bureau and the report serves as a good indicator of future supply of new homes in the real estate market.
Housing Starts in August were up 12% to a 1.575M unit annualized pace, following a downward revision to July. When factoring in the negative revision, Starts are really up 8.6%. Starts are flat year over year.
Single-family starts, which are most important, were up 3.4% last month at a 935M unit pace. Once again, there was a slight negative revision to July, and when factoring that in, SF starts are up 2%. They are now down 15% year over year.
So while interest rates are higher, and demand is lower, supply remains tight.
The slowing new construction and supply we are seeing is going to hurt economic activity, but from a price standpoint, will be somewhat supportive.
As demand is declining, so is supply.
This is very different from the housing bubble, where demand was waning, but supply of new homes was significantly increasing.
Housing Permits, which is the future supply, were down 10% last month at a 1.52M unit pace, while single family were down 3.5% last month to 899k units and 15% year over year. Additionally, Competitions were down 5.4% at a 1.34M unit annualized pace.
With household formations trending between 1.6M to 1.7M annualized, supply is not meeting demand.
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