July housing starts fall as both single-family and multifamily slow
Housing starts fell 12.4%, more than expected, but permits rose 5%, a possible signal of tightening supply
The decline in housing starts for July is a concerning sign for the construction industry, which has been a key driver of economic growth in recent years. The 12.4% drop, which was larger than expected, suggests that builders are becoming increasingly cautious about the market. This slowdown is evident in both single-family and multifamily construction, indicating that the challenges facing the industry are widespread.
The fact that permits actually rose 5% in July could be seen as a silver lining, as it suggests that builders are still optimistic about future demand. However, the increase in permits may not necessarily translate to actual construction activity, especially if builders are hesitant to start new projects due to concerns about supply chain disruptions, labor shortages, or rising costs. The tightening supply of homes, as hinted at by the permit increase, could lead to higher prices and reduced affordability, which would be a concern for would-be homebuyers.
Looking ahead, the construction industry will be closely watching the upcoming data releases to see if the July slowdown was a one-off or a sign of a more sustained trend. The next key indicator to watch will be the August jobs report, which will provide insight into whether the slowdown in construction activity is starting to impact employment in the sector. Additionally, the National Association of Home Builders' monthly survey, due out soon, will offer further clues about builder sentiment and the outlook for the industry.
Originally reported by housingwire.com. ConstructionNews adds analysis for real estate & property readers.