Housing starts slumped 6.8% in July compared with June and were down 16.0% compared with July 2023, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Starts of both single-family and multifamily homes fell to a seasonally adjusted annual rate of 1.238 million.
Starts of single-family homes in July were at a rate of 851,000, a decrease of 14.1% compared with June.
Starts of multifamily homes (five units or more per building) were at a rate of 363,000, an increase of 11.7% compared with June.
Building permits also decreased – they were at a seasonally adjusted annual rate of 1.396 million, down 4.0% compared with June and down 7.0% compared with July 2023.
Permits for single-family homes were at a rate of 938,000, a decrease of 0.1% compared with June, while permits for multifamily dwellings were at a rate of 408,000, a decrease of 4.8% compared with the previous month.
Housing completions in July were at a seasonally adjusted annual rate of 1.529 million, down 9.8% compared with June but up 13.8% compared with July 2023.
“Housing starts came in below expectations, dropping to the lowest level since May 2020,” says Odeta Kushi, deputy chief economist for First American, in a statement. “The monthly decline was driven by a sharp drop in single-family starts, down 14 percent, to a seasonally adjusted annual rate of 851,000.”
“Single-family permits, a leading indicator of future starts, also continued its downward trend,” Kushi says. “Single-family permits are down 9 percent from their recent 2024 peak. This month’s decline was modest compared to recent months, perhaps pointing to a stabilization in single-family permits.”
Kushi further notes that the report “aligns with homebuilder sentiment, which fell to the lowest level since December in August in the face of elevated mortgage rates.”
“Almost three-quarters of the responses to the August homebuilder sentiment index survey were collected during the first week of the month when mortgage rates averaged 6.73, but rates have since fallen to approximately 6.5 percent,” she says. “A bright spot in the August sentiment report is that the sales expectations sub-index increased.
“With lower mortgage rates on the horizon, buyer interest and builder sentiment should improve in the months ahead,” she adds.
“The decline in new home construction mirrors our latest builder surveys, which show that buyers remain concerned about challenging affordability conditions and builders are grappling with elevated rates for builder loans, a shortage of workers and lots, and supply chain concerns for some building materials,” says Carl Harris, chairman of the National Association of Home Builders (NAHB), in a statement.
“Better inflation data points to the Federal Reserve moving to cut interest rates possibly as early as September, and with interest rates expected to moderate in the months ahead, this will help both buyers and builders who are dealing with tight lending conditions,” adds Robert Dietz, chief economist for NAHB.
Photo: Avel Chuklanov