From staff and wire reports

WASHINGTON – U.S. housing construction fell a surprising 5.1% in August after three months of strong gains when home builders ramped up projects following a pandemic-induced shutdown in March and April.

New homes were started at a seasonally adjusted annual pace of 1.42 million last month after a 17.9% surge in July, the Commerce Department reported Thursday.

Bucking the national trend, Spokane County housing starts grew by about 25% in August over July with permits issued for 90 residences. August’s numbers also came in higher than the 81 housing starts in the county for 2019.

Applications for building permits across the country, which is a good barometer of future activity, dipped a slight 0.9% in August to a seasonally adjusted 1.47 million, but that decline followed solid gains in the previous three months including a 17.9% rise in July.

While the drop-off in new homes was greater than economists had expected, construction remains 51.6% above an April low, and economists said they expected home building to remain one of the bright spots in an economy still struggling with the coronavirus.

“Strong demand and a soaring level of home builder confidence will continue to support housing starts in the second half of 2020, though lingering coronavirus uncertainty and the economy’s slower pace of recovery may limit the upside,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

This week a survey gauging builder sentiment found strong optimism.

The survey by the National Association of Home Builders and Wells Fargo showed that builder confidence reached to an all-time high in September, even in the face of rising costs for building materials.

Construction starts in the bigger single-family sector showed further strength in August, rising by 4.1%, but this gain was offset by a sharp 25.4% drop in construction starts in the more volatile apartment sector.

Declines in overall construction activity were led by the Northeast, where home construction fell 33.1%.

There was also a decline of 17.7% in the South, traditionally a strong region.

Strength in August came from solid gains of 28.4% in the Midwest and 19.5% in the West.