U.S. Housing Starts Fell Markedly in July
by:Sandy Batten
|in:Economy in Brief
Summary
- Housing starts plunged 12.4% m/m in July after a 19.7% monthly surge in June.
- Single family starts fell 9.9% m/m to their lowest level since November 2022 while multi-family starts plummeted 16.8% m/m.
- Less volatile permits increased 5.0% m/m in July, the first monthly increase in three months, with a 2.5% monthly gain in single-family permits and a 9.4% monthly jump in multi-family permits.
Weighed down by further rises in longer-term interest rates and elevated inventories, housing construction fell markedly in July, declining a larger-than-expected 12.4% m/m (-13.5% y/y) to 1.239 million units at an annual rate following a surprising 19.7% monthly surge in June. This is the second lowest level of starts since the economy was shut down during the COVID pandemic in 2020. The Action Economic Forecast Survey expected a 5.4% m/m decline in July. Residential investment has been a persistent drag on real GDP growth recently but surprisingly added 0.05%-point to overall GDP growth in Q2 after having subtracted from overall growth in each of the previous five quarters. However, today’s report indicates that residential investment could return to being a drag in Q3.
Single-family starts plunged 9.9% m/m (-15.7% y/y) in July, the third monthly decline in the past four months, to the lowest level since November 2022. They had edged up 0.9% m/m in June. Usually volatile multi-family starts have been even more erratic over the past few months. They plummeted 16.8% m/m (-8.9% y/y) in July after a 76.8% monthly surge in June but a 41.4% monthly decline in May.
Starts fell in three of the four major geographic regions. Starts rose 17.1% m/m (62.4% y/y) in the Northeast in July on top of a 27.3% monthly gain in June. By contrast, starts fell 27.6% m/m (-27.0% y/y) in the Midwest, nearly reversing a 28.5% m/m jump in June. Starts declined 12.6% m/m (-24.1% y/y) in the South, the third monthly decline in the past four months. Starts decreased 13.8% m/m (+5.3% y/y) in the West, also the third monthly decline in the past four months.
In contrast to the marked decline in housing starts, housing permits rose 5.0% m/m (+3.1% y/y) in July, the first monthly increase in three months, to the highest level (1.443 million units) since February. Expectations were for little change in permits in July. Single-family permits rebounded, rising 2.5% m/m (+1.1% y/y) in July following a 2.2% monthly decline in June. Multi-family permits jumped 9.4% m/m (+6.4% y/y) in July, the first monthly increase in three months.
Reversing the regional performance of starts, permits fell in the Northeast (-2.6% m/m, +16.2% y/y), the first monthly decline in four months, but rose in each of the other three regions. Permits jumped 12.3% m/m (+2.7% y/y) in the Midwest, rose 6.6% m/m (-0.9% y/y) in the South and edged up 0.3% m/m (+8.0% y/y) in the West.
The housing starts and permits figures can be found in Haver’s USECON database. The expectations figure is contained in the AS1REPNA database.
Sandy Batten
AuthorMore in Author Profile »Sandy Batten has more than 30 years of experience analyzing industrial economies and financial markets and a wide range of experience across the financial services sector, government, and academia. Before joining Haver Analytics, Sandy was a Vice President and Senior Economist at Citibank; Senior Credit Market Analyst at CDC Investment Management, Managing Director at Bear Stearns, and Executive Director at JPMorgan. In 2008, Sandy was named the most accurate US forecaster by the National Association for Business Economics. He is a member of the New York Forecasters Club, NABE, and the American Economic Association. Prior to his time in the financial services sector, Sandy was a Research Officer at the Federal Reserve Bank of St. Louis, Senior Staff Economist on the President’s Council of Economic Advisors, Deputy Assistant Secretary for Economic Policy at the US Treasury, and Economist at the International Monetary Fund. Sandy has taught economics at St. Louis University, Denison University, and Muskingun College. He has published numerous peer-reviewed articles in a wide range of academic publications. He has a B.A. in economics from the University of Richmond and a M.A. and Ph.D. in economics from The Ohio State University.
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