Housing completions were once again the only bright spot in Friday’s housing starts data. U.S. Census Bureau and U.S. Department of Housing and Urban Development (heads-up display).
In July, the number of private residential construction starts was converted to a seasonally adjusted annual rate of 1.238 million units, a decrease of 6.8% from the previous quarter and an annual decrease of 16%. Single-family housing starts fell 14.1% from the previous month and dropped 14.8% year-on-year to 851,000 units; multi-family housing starts were 363,000 units, a quarter-to-quarter increase of 11.7% but a year-on-year decrease of 21.8%.
“Both single-family and multifamily starts are down significantly from a year ago,” said chief economist Lisa Sturtevant. Bright MLSsaid in a statement. “Compared to June, construction starts for five-plus units increased, while single-family starts declined.”
Overall, housing completions in July were 1.529 million units, an increase of 9.8% from the previous quarter and an increase of 13.8% from the same period last year. Single-family home completions totaled 1.054 million units, an increase of 0.5% from June and an increase of 3.6% from the same period last year. Although multifamily completions fell 24.4% from the previous month to 473,000 units, they were still up 49.2% compared with the same period last year.
While an increase in the inventory of new home completions is good news for many markets with tight housing inventories, economists say it could pose some longer-term challenges, but other macroeconomic factors could keep things on track.
“The large inventory of new homes currently is suppressing construction activity, but with mortgage rates falling and likely to fall further, we should see a pick-up in construction later this year,” navy federal credit unionsaid in a statement.
The pressure on new construction projects was reflected in the decline in building permits issued in July, which fell to an annual rate of 1.396 million units, down 4% from June and down 7% from the same period last year. The decline was primarily due to a 12.4% monthly decrease in multifamily permits and an 18.2% annual decline to 408,000 in July. Single-family residential permits also declined, down 0.1% on the month and 1.6% on the year to 938,000 units.
“Construction of both single-family and multi-family homes has been strong over the past few years. However, a decline in the number of new home construction permits issued in July suggests that residential construction activity will cool in the second half of 2024, while new multi-family construction will Building permits are down 12.4%,” Sturtevant said. “If more homes don’t come onto the market, housing affordability will continue to be a challenge. The United States has a structural housing deficit, with a housing shortage ranging from 1.5 million to 7 million units, depending on which source you look at.
From a regional perspective, the Northeast region (164,000 vehicles) increased by 42.6% in a single month. The South (640,000 cases), the Midwest (171,000 cases), and the West (263,000 cases) experienced monthly decreases of 13.6%, 1.7%, and 12.0% respectively.
The same trends are seen each year, with year-over-year growth in the Northeast (+45.1%) and declines in the South (-20%), Midwest (-1.7%) and West (-31.9%).
