Housing Starts Increase in July

(Image courtesy U.S. Census Bureau)

Housing starts in July were at a seasonally adjusted annual rate of 1,452,000, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced.

The rate is 3.9% above the revised June estimate and 5.9% above July 2022.

Single-family housing starts were at 983,000, 6.7% above June. The rate for units in buildings with five or more was 460,000.

“Demographic tailwinds from millennials continuing to age into their prime home-buying years and a lack of existing-home inventory means that new-home construction is essential in meeting shelter demand,” noted First American Deputy Chief Economist Odeta Kushi.

Permits were at a seasonally adjusted rate of 1,442,000, just 0.1% above June’s revised rate but 13% below July 2022.

Single-family authorizations were 930,000, 0.6% above June. Authorizations in buildings with five-plus units were 464,000.

Housing completions hit a seasonally adjusted annual rate of 1,321,000, 11.8% below the revised June estimate and 5.4% below last July’s rate.

Single-family completions hit 1,018,000, 1.3% above June. The rate for units in buildings with five or more units was 297,000.

“We believe the convergence of these three series continues to represent a normalization in residential construction conditions as backlogs clear and demand remains sufficient given the strong labor market and lack of existing homes available for sale,” said Mark Palim, Deputy Chief Economist at Fannie Mae.

“Still, we note some downside risk moving forward as home builder sentiment pulled back in August amid a resurgence in mortgage rates back toward 7%. Additionally, while the July figure came in close to our Q3 forecast for starts, we continue to expect a pullback towards the end of the year as we forecast a general slowing in economic growth,” Palim continued.