New construction of single-family homes saw an uptick, but a decline in multifamily production for apartments and condos meant an overall decrease of 4% in housing starts last month, according to new data from the Commerce Department.
Single-family home starts rose 1.3% to 876,000 units in July, with the largest increase seen in the South. However, builder’s concerns about affordability headwinds may have contributed to the overall decline. We’ve now seen three successive months of declined new housing starts.
Even so, “builders remain confident about the market, and this is reflected in recent modest gains in single-family starts,” insisted Greg Ugalde, chairman of the National Association of Home Builders.
Builders and home buyers may have been buoyed by the recent cut in interest rates in recent weeks. But builders still face problems around rising costs of labor and lots, and that’s seen many of them prioritize the construction of higher-end homes at the expense of more affordable starter homes.
Officials however tried to put a positive spin on the latest numbers.
“Permits bottomed out in April, and single-family starts hit their low point in May—and now we are starting to see the gradual improvement in the market that we've been forecasting,” said NAHB Chief Economist Robert Dietz.
Last week the NAHB reported that its builder confidence survey of new single-family homes saw an increase in August, and said that demand for homes at lower price points remains strong.
Indeed, housing permits, a gauge of future production, rose 8.4% to 1.34 million units in July. Single-family permits rose 1.8%, and multifamily permits surged 21.8%. Permits saw the biggest increases in the Northeast, rising 2.4%, while falling by 7.1% in the Midwest, 0.1% in the South, and 6.8% in the West.