Housing starts in July were at a seasonally adjusted annual rate of 1.428 million, an increase of 5.2% compared with June and up 12.9% compared with July 2024, according to estimates from the U.S. Census Bureau.
But the trend is not anticipated to last.
Starts of single-family homes were at a rate of 939,000, an increase of 2.8% compared with June.
Starts of multifamily homes (five units or more per building) were at a rate of 470,000, an increase of 11.6% compared with the previous month.
Building permits, however, dropped slightly in July: They were at an annual rate of 1.354 million, down 2.8% compared with June and down 5.7% compared with July 2024.
Permits for single-family homes were at a rate of 870,000, an increase of 0.5% compared with June. Authorizations for multifamily dwellings were at a rate of 430,000, down 9.9% compared with the previous month.
Housing completions were at a seasonally adjusted annual rate of 1.415 million, an increase of 6.0% compared with June but down 13.5% compared with July 2024.
“Single-family production continues to operate at reduced levels due to ongoing housing affordability challenges, including persistently high mortgage rates, the skilled labor shortage and excessive regulatory costs,” says Buddy Hughes, chairman of the National Association of Home Builders (NAHB), in a statement. “These headwinds were reflected in our latest builder survey, which indicates that affordability is the top challenge to the housing market.”
“The slowdown in single-family home building has narrowed the home building pipeline,” adds Robert Dietz, chief economist for NAHB. “There are currently 621,000 single-family homes under construction, down 1 percent in July and 3.7 percent lower than a year ago. This is the lowest level since early 2021 as builders pull back on supply.”
Odeta Kushi, deputy chief economist for First American, says while the monthly increase in housing starts and permits is a welcome development, “one data point doesn’t make a trend.”
“Sustained gains are needed to demonstrate continued progress in single-family homebuilding,” Kushi says in a statement. “The housing market remains structurally undersupplied, and we need more hammers at work to build the homes that are still in short supply.”
Kushi further notes that “single-family permits — a leading indicator of future construction — remain near their lowest level since March 2023, signaling continued weakness in the sector.”
“Builder sentiment receded further in August, marking the 16th consecutive month in negative territory,” Kushi says. “To help stimulate demand, builders have increasingly turned to sales incentives. According to the August HMI survey, 66 percent of builders reported using incentives — up from 62 percent in July and the highest share recorded in the post-COVID period.”
“Builders continue to face persistent supply-side challenges and intensifying competition from a growing inventory of resale homes,” she adds. “Without meaningful improvements in affordability, the outlook for the single-family sector remains constrained.”
Photo: Jens Behrmann