Construction of new homes fell 9.6% in July

New residential construction fell 9.6% in July as single-family and multi-family housing starts fell from the pace in June, the US Census Bureau and US Department of Housing and Urban Development said in a statement. . Press release.

New construction of single-family homes fell 10.1% from the revised June estimate to 916,000, while multi-family starts fell 10% to 514,000. On a yearly basis, starts single-family construction fell 18.5%, while multi-family dwellings remained strong, with an increase of 17.4%.

Overall, the combined pace of construction of single-family homes and buildings with five or more units fell 8.1% year over year to 1,446,000 units.

“A sharp decline in single-family home construction is another indicator that the housing slowdown shows no signs of abating as rising construction costs, high mortgage rates and supply chain disruptions continue to dampen the drag. market,” Robert Dietz, chief economist for the National Association of Home Builders, said in a Press release.

The decline in the pace of housing starts in July was even slower than expected, with analysts expecting it to hit 1.52 million from a forecast of 1.45 million, noted Odeta Kushi, an economics economist. Deputy Chief of First American.

“Housing is a primary transmission mechanism for the Federal Reserve, and as monetary tightening has intensified, so has housing construction,” Kushi said. “Builders are reacting to a drop in demand as rising mortgage rates have reduced affordability and kept potential buyers on the sidelines.”

Private housing completions reached an annual rate of 1,424,000 in July, 1.1% more than in June and 3.5% more than the previous year.

The seasonally adjusted annual rate of private dwellings authorized by building permits stood at 1,674,000 in July, down 1.3% from June and up 1.1% from a year earlier.

Despite the challenges of high costs and high mortgage rates, the housing market continues to be undersupplied, which should alleviate concerns about a stock market crash, said Kelly Mangold, director of RCLCO Real Estate Consulting.

“Looking ahead, housing starts are expected to continue to be impacted by interest rates, although there is still growing demand from households willing to buy – and who can adjust to new market conditions – because in reality, interest rates are still low relative to longer-term historical levels,” Mangold said.