Builders
started construction of privately-owned housing units
in July at a seasonally adjusted annual rate (SAAR) of 1,446,000 units (1.540
million expected).
This is 9.6% (±8.6%) below the revised June estimate of 1,599,000 (originally
1.559 million units) and 8.1% (±11.9%)* below the July 2021 SAAR of 1,573,000
units; the not-seasonally adjusted YoY change (shown in the table above) was -9.2%.
Single-family
housing starts in July were at a SAAR of 916,000; this is 10.1% (±10.8%)* below
the revised June figure of 1,019,000 units (-18.8% YoY). Multi-family: 530,000
units (-8.6% MoM; +16.3% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,424,000 units.
This is 1.1% (±14.8%)* above the revised June estimate of 1,409,000 (originally
1.365 million units) and 3.5% (±15.5%)* above the July 2021 SAAR of 1,376,000
units; the NSA comparison: +2.8% YoY.
Single-family completions were at a SAAR of 1,009,000; this is 0.8% (±12.2%)* below the revised June rate of 1,017,000 units (+6.2% YoY). Multi-family: 415,000 units (+5.9% MoM; -3.5% YoY).
Total
permits were at a SAAR of 1,674,000 units (1.650 million expected). This is 1.3%
below the revised June rate of 1,696,000 (originally 1.666 million units), but 1.1%
above the July 2021 SAAR of 1,655,000 units; the NSA comparison: -5.5% YoY.
Single-family permits were at a SAAR of 928,000; this is 4.3% below the revised June figure of 970,000 units (-18.8% YoY). Multi-family: 746,000 units (+2.8% MoM; +20.0% YoY).
Builder
confidence fell for the eighth straight month in August as elevated interest
rates, ongoing supply chain problems and high home prices continue to
exacerbate housing affordability challenges. In another sign that a declining
housing market has failed to bottom out, builder confidence in the market for
newly built single-family homes fell six points in August to 49, marking the
first time since May 2020 that the index fell below the key break-even measure
of 50, according to the National Association of Home Builders (NAHB)/Wells
Fargo Housing Market Index (HMI).
“Ongoing
growth in construction costs and high mortgage rates continue to weaken market
sentiment for single-family home builders,” said NAHB Chairman Jerry
Konter. “And in a troubling sign that consumers are now sitting on the
sidelines due to higher housing costs, the August buyer traffic number in our
builder survey was 32, the lowest level since April 2014 with the exception of
the spring of 2020 when the pandemic first hit.”
“Tighter
monetary policy from the Federal Reserve and persistently elevated construction
costs have brought on a housing recession,” said NAHB Chief Economist Robert
Dietz. “The total volume of single-family starts will post a decline in 2022,
the first such decrease since 2011. However, as signs grow that the rate of
inflation is near peaking, long-term interest rates have stabilized, which will
provide some stability for the demand-side of the market in the coming months.”
Roughly
one-in-five (19%) home builders in the HMI survey reported reducing prices in
the past month to increase sales or limit cancellations. The median price
reduction was 5% for those reporting using such incentives. Meanwhile, 69% of
builders reported higher interest rates as the reason behind falling housing
demand, the top impact cited in the survey.
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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