Housing Starts Reach Seven-Year High in July

Across the country, the short supply of houses available to prospective buyers has caused housing prices to surge, often by huge amounts. However, a new report from the National Association of Home Builders indicates that the issue of low supply may finally begin to reverse itself in the coming months. According to data from the U.S. Department of Housing and Urban Development and the Commerce Department, nationwide housing starts in July reached the highest levels since October of 2007!

The NAHB report shows that housing starts across the United States increased by 0.2 percent to a seasonally adjusted annual rate of 1.206 million units in July, thanks mainly to large gains in single-family home starts. In fact, single-family starts rose 12.8 percent to a seasonally adjusted annual rate of 782,000 units. On the other hand, multifamily production actually fell by 17 percent, down to 424,000 units last month.

Although the drop in multifamily starts may seem precipitous, NAHB Chief Economist David Crowe does not believe that there is reason to worry, stating that, “This month’s drop in the more volatile multifamily side is a return to trend after an unusually high June. While multifamily production has fully recovered from the downturn, single-family starts are improving at a slow and sometimes intermittent rate as consumer confidence gradually rebounds. Continued job and economic growth will keep single-family housing moving forward.” 

While national growth occurred in July, regional numbers were not all equal, or even positive. Combined single- and multifamily starts rose by 20.1 percent in the Midwest and 7.7 percent in the South, whereas the Northeast and West showed respective losses of 27.5 percent and 3.1 percent.

These numbers are promising, but it may be too early to declare the housing supply shortage to be at an end. After gaining for several months, overall housing permits fell 16.3 percent in July. Single-family permits fell 1.9 percent to a rate of 679,000 while multifamily permits dropped 31.8 percent to 440,000.

While all four regions experienced drops in new housing permits, there was a great amount of variation between areas. The Northeast was hit the hardest, with a whopping 60.2% decrease. Things were comparatively mid in the Midwest, South, and West, where respective drops were only 4.6 percent, 1.7 percent and 9.9 percent.

Source: Single-Family Gains Push Housing Starts to Highest Level Since 2007