According to the latest data from the U.S. Department of Housing and Urban Development and the Commerce Department, U.S. housing starts fell back 4.8 percent in July to a seasonally adjusted annual rate of 1.16 million units. This is a contrast to the numbers seen in June, which saw an 8.3 percent rise.
While these new numbers are not horrible news—July’s figure is still up 5.6 percent year-over-year—it does speak to the continued volatility of the market. Most of the bad news comes from multifamily starts, which dropped a whopping 17.1 percent in July, and are down 35.2 percent year-over-year. In addition, building permit authorizations fell 4.1 percent to a seasonally adjusted annual rate of 1.22 million units.
However, a press release from the National Association of Home Buildiers (NAHB) accentuates the positive from these new numbers: that single-family starts continue to hold steady. This segment saw just a 0.5 percent drop in July to a seasonally adjusted rate of 856,000. This is still a 10.9 percent improvement over one year ago, and there is some faith that this will buoy housing starts as a whole.
“The overall strengthening of the single-family sector is consistent with solid builder confidence in the market,” said Granger MacDonald, NAHB chairman. “This sector should continue to firm as the job market and economy grow and more consumers enter the housing market.”
Robert Dietz, NAHB chief economist, said that multifamily production “peaked” in 2015, and the sector should continue to level off.
Builder confidence this year has been similarly volatile, and after several months of cooling there, the NAHB reported a rebound in August due to economic growth and competitive mortgage rates. However, continued supply-side challenges have tampered this confidence all year.
“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” Dietz said. “GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”