US housing starts increase by more than forecast in August

US housing starts rose by more than expected in August, driven by multifamily projects, though backlogs continued to weigh on construction.

Residential starts rose 3.9 per cent last month to a 1.62 million annualised rate after an upwardly revised July print, according to government data released on Tuesday. The median estimate in a Bloomberg survey called for a 1.55 million pace.

Multifamily starts - which tend to be volatile and include apartment buildings and condominiums - increased 20.6 per cent to 539,000. Single-family starts decreased for a second month to an annualised pace of 1.08 million units.

The data suggest that builders continue to struggle with limited availability of land, labour and materials, which has slowed residential starts from a 15-year high in March. Despite the bottlenecks, housing starts remain mostly above pre-pandemic levels, which is expected keep construction activity elevated for some time.

The report showed backlogs continued to climb, with the number of single-family houses under construction but not yet completed rising to the highest since 2007. Houses that are authorised but not yet started rose to the most since 1979, further underscoring builders' struggle to keep up with demand.

Building permits, meanwhile, increased 6 per cent in August, the biggest gain since January, reflecting a sizeable jump in multi-family units. Permit applications for single-family homes also edged higher.

A measure of homebuilder sentiment out on Monday rose in September for the first time in five months amid lower lumber prices and strong housing demand. BLOOMBERG