August U.S. Home Building Slides 5.1% After Months of Gains

Commerce Dept.: Building permit applications dipped 0.9% to a seasonally adjusted 1.47M; however, the drop-off in new home starts was greater than analysts expected.

WASHINGTON (AP) — U.S. housing construction fell a surprising 5.1% in August after three months of strong gains when home builders ramped up projects following a pandemic-induced shutdown in March and April.

Applications for building permits, which is a good barometer of future activity, dipped a slight 0.9% in August to a seasonally adjusted 1.47 million but that decline followed solid gains in the previous three months including a 17.9% rise in July.

New homes were started at a seasonally adjusted annual pace of 1.42 million last month after a 17.9% surge in July, the Commerce Department reported Thursday.

While the drop-off in new homes was greater than economists had expected, construction remains 51.6% above an April low.

Also, this week a survey gauging builder sentiment found strong optimism. The survey by the National Association of Home Builders and Wells Fargo showed that builder confidence reached to an all-time high in September, even in the face of rising costs for building materials.

Declines in activity were led by the Northeast, where home construction fell 33.1%. There was also a decline of 17.7% in the South, traditionally a strong region.

Strength in August came from solid gains of 28.4% in the Midwest and 19.5% in the West.

Copyright © 2020 Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.

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