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Economy in Brief

U.S. Housing Starts Drop to 1.446 Mil. in July
by Winnie Tapasanun  August 16, 2022

• Starts level is lowest since February 2021.

• Single-family starts at 916,000, lowest since June 2020.

• Starts in the Northeast at a 14-year high; starts in the other regions down.

• Building permits at 1.674 mil., lowest since September 2021.

• Single-family & multi-family starts and single-family permits decrease, but multi-family permits rise for the second straight month.

New residential construction activity in July continued to feel the pressure from rising interest rates and home prices. Total housing starts fell 9.6% m/m (-8.1% y/y) to a lower-than-expected 1.446 million units (SAAR) in July after a 2.4% increase to 1.599 million in June (1.559 million initially) and a 13.5% decrease to 1.562 million in May (1.591 million previously), data from the U.S. Census Bureau showed. The July reading was the lowest level of housing starts since February 2021. The Action Economics Forecast Survey had expected 1.534 million starts in July.

Single-family starts slid 10.1% (-18.5% y/y) to 916,000 in July, the fifth consecutive m/m slide to the lowest level since June 2020, after a 5.0% decline to 1.019 million in June (982,000 initially). Multi-family starts fell 8.6% (+18.0% y/y) to 530,000, the second m/m fall in three months, after an 18.6% June rebound to 580,000 (577,000 initially).

Housing starts dropped in all the major regions except in the Northeast. Starts in the Midwest worsened 33.8% (-23.6% y/y) to 139,000 in July, the third m/m drop in four months to the lowest level since February 2021, on top of an 8.7% decline to 210,000 in June. Starts in the South decreased 18.7% (-21.5% y/y) to 710,000, the lowest level since August 2020, after a 1.5% June rebound to 873,000. Starts in the West declined 2.7% (-11.8% y/y) to 367,000 in July after having recovered 10.2% to 377,000 in June. To the upside, starts in the Northeast surged 65.5% (228.6% y/y) to 230,000, the largest m/m gain since last August to the highest level since June 2008, after a 6.9% June rise to 139,000.

Building permits fell 1.3% (+1.1% y/y) to 1.674 million in July, the third m/m fall in four months to the lowest level since September 2021, following a 0.1% uptick to 1.696 million in June. Single-family permits slid 4.3% (-11.7% y/y) to 928,000, the fifth straight m/m slide to the lowest level since June 2020, after a 7.7% June drop to 970,000. In contrast, multi-family permits increased 2.8% (23.5% y/y) to 746,000 in July, the highest level since December, on top of a 12.7% rebound to 726,000 in June.

The housing starts and permits figures can be found in Haver's USECON database. The expectations figure is contained in the AS1REPNA database.

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