Housing Starts Hold Their Ground in July
Total housing starts inched up 0.9 percent in July to a seasonally adjusted annual rate of 1.17 million units, according to data released Aug. 16 from the U.S. Department of Housing and Urban Development and the Commerce Department.
The July reading of 1.17 million is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts held firm, up 0.9 percent to 862,000 units. Meanwhile, the multifamily sector, which includes apartment buildings and condos, rose 3 percent to 306,000.
“Builder confidence remains solid, although it has fallen back somewhat in recent months due to rising construction costs in 2018, including lumber,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “As builders grapple with higher costs, one positive development is that lumber prices have shown signs of easing the past two months off their record high levels posted in June.”
Some projects are experiencing construction start delays due to cost concerns, with the number of single-family units authorized but not started up 25 percent since July 2017.
“Supply-side challenges including increases in material prices and chronic labor shortages are affecting affordability in many markets,” said NAHB Chief Economist Robert Dietz. “However, consumer demand remains strong due to a growing economy and job market and favorable demographics. Moreover, on a year-to-date basis, single-family construction has shown steady progress, up 7.2 percent, while 5+ multifamily production is up 3.4 percent as well.”
Regionally, combined single- and multifamily housing starts in July rose 11.6 percent in the Midwest and 10.4 percent in the South. Starts fell 4 percent in the Northeast and posted a 19.6 percent decline in the West due to affordability constraints in the coastal markets.
Overall permits, which are often a harbinger of future housing production, rose 1.5 percent to 1.31 million units in July. Single-family permits posted a modest gain of 1.9 percent to 869,000. Multifamily permits were relatively unchanged, up 1.7 percent to 410,000.
Looking at regional permit data, permits rose 5.9 percent in the Northeast, 5.8 percent in the Midwest and 1.2 percent in the West. Permits edged 0.3 percent lower in the South.