According to new data released by the U.S. Department of Housing and Urban Development and the Commerce Department, total housing starts increased 9.2 percent in August. This makes the seasonally adjusted annual rate 1.28 million units.

The 1.28 million units refers to the number of housing units builders would start if they maintained these starts for the next 12 months. The overall number includes single-family starts which increased 1.9 percent to 876 thousand units, and multifamily starts which increased 29.3 percent to 408 thousand.

“Builders remain largely confident because the economy is solid and demographics point to continued demand,” says NAHB chairman Randy Noel. “However, affordability continues to be a concern for both builders and buyers.”

Even though housing production rose, overall permits fell 5.7 percent to 1.23 million units. Permits are an indicator of future housing production. Single-family permits dropped 6.1 percent to 820 thousand units, and multifamily permits dropped 4.9 percent to 409 thousand units.

“Although we saw an increase in starts in August, we are likely to see softening in the market in the months ahead,” says NAHB chief economist Robert Dietz. “Affordability is a particular concern because of home price gains, due in part to the high regulatory burden on new home construction. Increasing costs for building materials prompted partially by recently imposed tariffs on a wide range of products are also a concern. Moreover, interest rates are continuing their gradual upward climb.”

The West reported the highest numbers with a 19.1 percent increase in combined single-family and multifamily housing starts. The Northeast remained unchanged, the Midwest saw a 9.1 increase and 6.5 in the south.

Permits, however, decreased in every region. The Northeast saw a 19.2 percent decrease and the Midwest was down by 1.7 percent. The South fell 2.9 percent, and 8.4 percent in the West.

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