A new report from the U.S. Census Bureau showed that privately-owned housing starts in July grew at a seasonally adjusted annual rate (SAAR) of 1.155 million units. That was a 4.8 percent decrease from June’s downward-revised print and well below economists’ forecasts. Most of the weakness, though, was due to a 17.1 percent plunge in multi-family units (rentals), while single-family housing starts slid by just 0.5 percent in July. Regionally, housing starts last month rose in the South (+0.6 percent) but fell in the Northeast (-15.7 percent), the Midwest (-15.2 percent), and the West (-1.6 percent).
As for total building permits, this popular gauge of future construction activity also declined in July (-4.1 percent), and again the weakness was driven by pullbacks in the rental arena. Despite last month’s slowdown, homebuilders remain optimistic, according to new data from the National Association of Home Builders (NAHB). Specifically, the NAHB’s sentiment index jumped to 68.0 this month, the best reading since May. NAHB chairman Granger MacDonald added that homebuilders are “encouraged by rising demand,” which he attributed to “ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence.” However, NAHB chief economist Robert Dietz cautioned that “builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”
Sources: Econoday, NAHB, U.S. Census Bureau, FRBSLPost author: Charles Couch