Raise the roof: Housing starts hit a 12-year high

A report released Sept. 18 from the U.S. Housing and Urban Development and the U.S. Census Department shows total housing starts rose 12.3 percent in August to a seasonally adjusted annual rate of 1.36 million units, which is the highest level since May 2007.

Last month's 12-year high was led by a surge of construction for multi-family housing such as apartment buildings and condos. This sector reversed two months of declines with a 32.8 percent spike in starts to 445,000 units, if builders keep this pace for the next 12 months.

Single-family starts are up 4.4 percent to 919,000 units, which revises July's estimate of 880,000. The July figure for housing with five or more units was revised up from 424,000 units. That's potentially 39,000 more houses and 21,000 more condos and apartments that will need vinyl siding and windows, fiberglass doors, PVC and polyethylene pipes, foam insulation and the like.

"Housing has been on an upswing in recent months as the pace of permits and starts has been rising since spring," according to Robert Dietz, the chief economist for the National Association of Home Builders (NAHB). "While these are positive developments, single-family starts are down 2.7 percent year-to-date as the catch up process continues."

Builders have been hampered by labor shortages, strict regulations and higher material costs due to tariffs.

However, the U.S. Federal Reserve lowered borrowing costs in July for the first time since 2008. Residential investment had contracted for six straight quarters, which is the longest stretch since the 2007-09 recession.

Last month's uptick suggests that lower mortgage rates are lifting the housing market.

Regionally, the NAHB says permit data on a year-to-date basis shows an increase of 5.7 percent in the Northeast and 1.6 percent in the South while permits fell 6.9 percent in the Midwest and 5.6 percent in the West.