Builders
started construction of privately-owned housing units
in July at a seasonally adjusted annual rate (SAAR) of 1,452,000 units (1.455
million expected).
This is 3.9% (±16.0%)* above the revised June estimate of 1,398,000 (originally
1.434 million units) and 5.9% (±16.1%)* above the July 2022 SAAR of 1,371,000
units; the not-seasonally adjusted YoY change (shown in the table above) was +5.8%.
Single-family
housing starts in July were at a rate of 983,000; this is 6.7% (±13.0%)* above
the revised June figure of 921,000 units (+10.0% YoY). Multi-family: 469,000
units (-1.7% MoM; -2.7% 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 1,321,000. This is 11.8% (±7.8%) below the
revised June estimate of 1,498,000 (originally 1.468 million units) and 5.4%
(±11.1%)* below the July 2022 SAAR of 1,396,000 units; the NSA comparison: -7.8%
YoY.
Single-family completions were at a SAAR of 1,018,000; this is 1.3% (±11.6%)* above the revised June rate of 1,005,000 units (-0.5% YoY). Multi-family: 303,000 units (-38.5% MoM; -22.7% YoY).
Total
permits were at a SAAR of 1,442,000 units (1.464 million expected). This is 0.1%
above the revised June rate of 1,441,000 (originally 1.440 million units), but 13.0%
below the July 2022 SAAR of 1,658,000 units; the NSA comparison: -14.0% YoY.
Single-family permits were at a SAAR of 930,000; this is 0.6% above the revised June figure of 924,000 units (+1.3% YoY). Multi-family: 512,000 units (-1.0% MoM; -33.3% YoY).
Press
release from NAHB’s Robert Dietz:
“After
steadily rising for seven consecutive months, builder confidence retreated in
August as rising mortgage rates nearing 7% (per Freddie Mac) and stubbornly
high shelter inflation have further eroded housing affordability and put a
damper on consumer demand.
“Builder
confidence in the market for newly built single-family homes in August fell six
points to 50, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI). But while this latest confidence
reading is a reminder that housing affordability is an ongoing challenge,
demand for new construction continues to be supported by a lack of resale
inventory, as many home owners elect to stay put because they are locked in at
a low mortgage rate.
“Declining
customer traffic is a reminder of the larger challenge that shelter inflation
is up 7.7% from a year ago and accounted for a striking 90% of the July
Consumer Price Index reading of 3.2%. The best way to bring housing inflation
down and ease the housing affordability crisis is to enact policies at all
levels of government that will allow builders to construct more homes to
address a nationwide shortfall of approximately 1.5 million housing units.
“The
August HMI survey also revealed that rising mortgage rates are causing more
builders to use sales incentives to attract home buyers. After dropping
steadily for four months (from 31% in March to 22% in July), the share of
builders cutting prices to bolster sales rose again to 25% in August. The
average decline for builders reducing prices remained at 6%. And the share of
builders using incentives to bolster sales was 55% in August, higher than in
July (52%) but still lower than in December 2022 (62%).”
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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