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Housing starts rose 9.2% in August, analysts at Wells Fargo, point out that most of the gain coming from a 29.3% rise in multifamily starts and they see that homebuilding remains in a soft patch.

Key Quotes:  

“This past month’s 9.2% rise in housing starts was larger than consensus estimates but does not likely signal a significant improvement in homebuilding. Most of the gain was in the volatile multifamily segment, and both multifamily and singlefamily starts remain below the pace seen earlier this year.”

“Housing permits fell 5.7% in August, with multifamily declining 4.9% and single-family dropping 6.1%. Permits are now running below starts, suggesting homebuilding is losing momentum.”

“The drop in permits and continued sluggish pace of homebuilding fly in the face of the still strong homebuilders’ survey. Shortages of lots and construction workers and higher material prices might be holding back some projects, particularly starter homes.”