Housing starts tumbled in August, led by a falloff in apartment and condo construction, new figures showed.
Construction of new homes plunged 14.4 percent from July to a seasonally adjusted annual rate of 956,000, the Commerce Department said Thursday. The sharp drop-off came predominately from the multifamily sector, where starts declined 31.7 percent.
Single-family-home starts, which economists say are a less-volatile measure that also contributes more to job growth, fell 2.4 percent.
The overall decline was worse than expected. Economists had generally called for a rate of slightly more than 1 million.
Still, the report isn’t as bad as the “headline numbers appear,” IHS Global Insight economists Patrick Newport and Stephanie Karol said, noting that the decline came chiefly from the volatile multifamily sector.
Starts were above last year’s levels. And July’s numbers were revised up from 1.093 million to 1.117 million, the highest new-construction rate since November 2007.
Home builders have expressed growing optimism in the single-family-home market recently. A gauge of that confidence rose to its highest level since 2005, the National Association of Home Builders said Wednesday.
Still, builders have yet to ramp up construction to historically normal levels.
Building permits, a gauge of future construction, fell 5.6 percent in August from a month earlier.
Depressing the housing recovery is the lack of new households — for example, when a young adult leaves his or her parents’ home, or someone ditches a roommate to live on their own, Newport and Karol wrote in an emailed analysis.
“Without an increase in household formation, demand for additional housing stock will remain low,” they said.