U.S. housing starts tumbled 3 percent in August to a seasonally adjusted annual rate of 1.126 million, according to a report released Thursday by the U.S. Department of Commerce. The number of privately owned new houses -- or housing units -- that construction was started on showed declines from July's figures in both apartment buildings and single-family homes.
Starts on multifamily units, which include condominiums and apartments, dropped to 387,000. Single-family homes, which make up around two-thirds of the market, fell to 739,000. Applications for building permits -- an indication for upcoming construction -- increased by 3.5 percent to 1.17 million, a figure that had been revised from July’s rate of 1.13 million.
The August decline is a potential sign that the housing market, which has been accelerating for much of the year, may be starting to level off.
"This is a mere blip on the radar," said Tom Wind, executive vice president of home lending at EverBank, told the Associated Press. "The housing market's underlying fundamentals remain on pace for continued recovery."
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Economists questioned by the Wall Street Journal overestimated initial predictions on housing starts, suggesting that they would come in at 1.18 million while falling short on building permits that they said would be 1.15 million.
Over the course of this year, housing starts have climbed 11.3 percent. The Associated Press suggested that steady job gains of 2.9 million in the past 12 months have contributed to increased demand from buyers and renters.
The report also suggested that confidence among builders was increasing.
The National Housing Association of Home Builders/Wells Fargo builder sentiment index, which measures market conditions for the sale of new homes, rose this month to 62, the highest the index has been since October 2005, when it was at 68. Any reading above 50 means that builders view market conditions favorably for newly built, single-family homes.
The Commerce Department reported in late August that new-home sales in July rose by 5.4 percent to a seasonally adjusted rate of 507,000, after dropping in June. Figures for August’s existing-home sales is scheduled for release Sept. 21, and new-home sales data is expected to be released Sept. 24.