A 5.0% jump in multifamily construction lifted July U.S. housing starts 2.1% over June’s seasonally adjusted annual rate, beating economists’ consensus forecasts for the month. Wells Fargo Economics points out that this is housing’s second pleasant surprise in a row, as surging single-family construction lifted June starts 4.8%.
According to estimates from the Census Bureau and the Department of Housing and Urban Development, single-family starts increased just 0.5% to a 770,000-unit seasonally adjusted annual rate in July. Year-to-date, single-family housing starts are running almost 11% higher than the year-to-date total for July of 2015.
The National Association of Home Builders’ (NAHB) analysis of July estimates welcomes the figures. The association’s statement says, “Year-to-date measures continue to be consistent with the NAHB forecast of growth for single-family construction this year, as well as a slight dip for apartment development compared to 2015 levels.”
Single-family permits were 2.4% greater than the July 2015 rate, but the permit rate dropped nearly 4% from June to July. Since the beginning of 2016, single-family permits are more than 7% higher than the same period in 2015.
Multifamily starts (units in properties with 2 or more units) increased to a 441,000 seasonally adjusted annual rate. Despite the jump in July, multifamily permits year-to-date now stand at just less than 1% lower than the total from this time in 2015.
Regionally, single-family starts fell back in the Northeast in July after a strong June, declining almost 24% on a monthly basis. The Midwest also showed some weakening, declining almost 3% on a monthly basis. In contrast, single-family starts rose in those parts of the country that have the most home construction; up almost 4% in the South and 5% in the West.
Year-to-date, single-family housing starts are up in all regions, compared to the first seven months of 2015:
- Northeast +15%
- Midwest +15%
- South +12%
- West +3%
Taking the long view, an examination of the count of homes currently under construction provides the degree of market mix and momentum of the recovery in home construction. As of July, 58% of units under construction in the nation were multifamily (605,000), a 17% gain in the total from a year earlier.
There were 432,000 single-family homes under construction in July, which is 12% higher than July 2015. This is the highest count since October 2008 and is an indicator that growth in home construction is a key bright spot in the overall economy.
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