Housing starts increased in July both monthly and annually, therefore homebuyers could soon receive much-needed relief from the competitive housing market and increasing home prices.
“Single-family starts are still growing at double-digit rates,” Trulia Chief Economist Ralph McLaughlin said. “Supply-constrained homebuyers should rest assured that relief is on the way.”
Not everyone, however, is as positive about the report.
“Housing starts managed to rise modestly for the second month in a row in July, but their overall performance remains lackluster,” said Capital Economics Property Economist Matthew Pointon.
“But with so few existing homes for sale and the labor market creating jobs at a solid clip, the conditions are in place for builders to begin upping production in the coming months,” Pointon said.
Privately-owned housing starts in July increased 2.1% to 1,211,000, an increase from June’s 1,186,000, according to a report released by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Housing starts increased 5.6% annually from last year’s 1,147,000.
Of those, single-family housing starts increased 0.5% from last month’s 766,000 to 770,000.
“The rate of housing start growth is slowing,” McLaughlin said. “July represents the fourth straight month where the 12-month rolling total was flat or less than the previous month. Still, the total was the most starts in a 12-month period since May 2008.”
Housing completions, on the other hand, decreased 8.3% from June’s 1,119,000 to 1,026,000 in July. It is up 3.2% from last year’s 994,000.
Of those, single-family housing completions only decreased 0.4% from June’s 746,000 to July’s 743,000.
“The wave of single-family starts this year still isn’t showing signs of rising the tide for construction jobs,” McLaughlin said. “The number of construction jobs per housing starts hit a 10-year low in July, likely due to persistent labor shortages.”
Building permits decreased 0.1% to 1,152,000, down from June’s rate of 1,153,000 but up 0.9% from last year’s 1,142,000.
Of those, single-family authorizations decreased 3.7% in July to 711,000, down from June’s revised 738,000.
“This is a strong report, and we are particularly pleased with the single-family segment,” said Tian Liu, Genworth Mortgage Insurance chief economist. “We believe that growth in housing starts will be led by single-family homes.”
“Single-family homes have experienced a slower recovery in the past few years, and remain under-supplied today,” Liu said. “We expect supply of single-family homes to catch up over the next few years.”
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