Housing starts slide in August, but interest rate cut should help

Privately owned housing starts fell 8.5% month over month (m/m) in August to a seasonally adjusted annual rate (SAAR) of 1.31 million units, according to data from the US Department of Housing and Urban Development and the US Census Bureau.

Single-family starts declined 7% m/m to an SAAR of 890,000 units – the lowest level since July 2024 – while multifamily starts dropped 11% to a 403,000-unit rate.

Regionally, year-to-date housing starts were up 15% in the Midwest and 8.3% in the Northeast, but down 3.5% in the South and flat in the West.

“Affordability continues to be a major hurdle for buyers, and builders are responding by slowing the pace of single-family construction,” said Buddy Hughes, chairman of the National Association of Home Builders (NAHB). “Still, we’re seeing cautious optimism as mortgage rates have edged lower in recent weeks.”

On Wednesday afternoon, the Federal Reserve announced a 0.25 percentage point cut in the federal funds rate to 4-4.25%.

“Builders may soon benefit from lower borrowing costs for land development and construction,” noted NAHB Chief Economist Robert Dietz. “This could help support housing production heading into the fall.”