July Housing Starts Resume Slow Growth

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The U.S. Census Bureau and the Department of Housing and Urban Development reported Thursday morning that new housing starts in July rose to a seasonally adjusted annual rate of 1.168 million, an increase of 0.9% from the downwardly revised June rate of 1.158 million and a decrease of 1.4% compared with the July 2017 rate of 1.185 million.

The revision to the June rate dropped by 12,000 new housing starts from the previously reported total. The consensus estimate from a survey of economists expected a July rate of around 1.271 million.

Housing starts dropped sharply and surprisingly in June, and analysts were looking for more improvement than we saw in July. The June rate was even revised downward, making the overall situation slightly worse.

For the first seven months of the year, total starts are up 6.2% on a seasonally adjusted basis and single-family starts are up 7.2%. Construction of buildings with five or more units is up 3.4% over the same period.

Single-family housing starts rose month over month by 8,000 in July to 862,000. The increase primarily reflects a month-over-month rise of 25,000 in the Midwest and 9,000 in the South.

The seasonally adjusted rate of new building permits rose to 1.31 million, up 1.5% from the June rate of 1.292 million and 4.2% higher than the July 2017 rate.

Permits for new single-family homes rose month over month in July from a revised annual rate of 853,000 in June to a seasonally adjusted annual rate of 869,000. The rate increased by 6.4% year over year.

Multi-family starts for buildings with five or more units increased by 23% year over year in July and rose by 4.2% compared with June. This number is more volatile than the single-family number and has moved mostly sideways since 2013.

In 2017, 1.202 million housing units were started, up 2.4% compared with 2016, and a 10-year high. An estimated 1.263 million permits were issued in 2017, up 4.7% year over year.