The Census Bureau today released new numbers on housing starts and permits for July, and unfortunately, both were down from their June figures. New housing starts fell 1.5 percent to 604,000 new units (at the annual rate); this was down from the 613,000 units being started in June. The good news is that starts stayed above the threshold of 600,000 units – a level that it has had trouble exceeding the past couple of years.
The bad news is that the decline was mostly attributable to fewer single-family homes being started. New single-family home construction declined from 447,000 in June to 425,000 in July, and while this represents a higher figure for much of the year, outside of January and June, it is a 4.9 percent drop. Multi-family housing starts, on the other hand, rose 7.8 percent from 166,000 to 179,000.
Housing permits also declined, falling 3.2 percent from 617,000 in June to 597,000 in July. Here, it was multi-family housing permits that declined the most, with single-family permitting eking out a small gain. Moving forward, residential construction remains stuck in neutral, with weaker housing permit numbers suggesting slower growth.
These findings mirror yesterday’s release of the Housing Market Index (HMI) from the National Association of Home Builders (NAHB) and Wells Fargo. This survey found that housing activity remained flat between July and August. While there was a slight increase in single-family home sales, the expected traffic over the next six months fell 2 points. Regional sales were mixed, with more activity in the Northeast offset by reduced sales in the Midwest. Moreover, from the larger perspective, this index has not changed much over the course of the past year, suggesting that the housing market remains in the doldrums.
Summing this up, NAHB Chief Economist David Crowe writes in the press release, “While buying conditions are very favorable in terms of prices, interest rates and selection, consumers are worried about what the future will bring, and builders are echoing those sentiments in their responses to the HMI survey.”
Chad Moutray is chief economist, National Association of Manufacturers.