Total housing starts and housing permits made decent gains in August compared to the month prior, but the focus was on multifamily units. Single-family housing starts fell 2.8% while single-family housing permits, a gauge for future activity, were essentially unchanged after falling in the past four months. Multifamily starts, comprising mostly apartments, increased by 20.6% while multifamily permits rose 15.8%.
There is certainly a housing shortage, as reflected in the low inventory of homes for sale and in low rental vacancy rates. However, a shift toward rental buildings means less access to homeownership over the long run and the accompanying opportunity for wealth gains. Home price gains will surely moderate after experiencing gains of nearly 20% in the first half of this year. But given the housing shortage and the lack of big increases in the construction of single-family homes, home prices will continue to move higher than most people’s income gains. That’s good news for property owners, but bad news for those wanting to become homeowners.