Single-family units were at the center of increasing housing starts in July. According to the latest new residential construction statistics for July published by the Census Bureau and the U.S. Department of Housing and Urban Development (HUD), housing starts rose 0.9 percent over June 2018. Though building permits increased 1.5 percent month over month, housing completions saw a decline of 1.7 percent.
On a year-over-year basis, housing starts were 1.4 percent below their July 2017 estimates. However, building permits rose 4.2 percent over the same period last year. The rise in building permits was led by single-family unit authorizations that were at a rate of 869,000 units, a rise of 1.9 percent over the revised June figures, the data indicated.
According to Mark Fleming, Chief Economist at First American, the rise in single-family permits shows that homebuilders are pushing through new construction projects despite the headwinds of rising tariffs and costs.
“Despite significant cost headwinds, home builders are pushing through new construction projects. In fact, residential building permits increased 4.2 percent since this time last year,” Fleming said. “Permits for single-family homes increased 1.9 percent compared to the previous month, the largest monthly gain since October of 2017.”
The data indicated that housing completions for single-family units lagged and were 5.2 percent below the revised June rate of 859,000. So what do these figures mean for homebuyers? For one, they can take respite in the fact that construction of new homes is on the rise, according to Fleming. “The Census Bureau report on housing construction showed builders are starting work on additional housing, inching closer to balancing inventory with demand,” he said.
The increase in building permits also pointed to some easing of the inventory pressure in housing. “The increase in permits is a welcome sign as a strong economy with continuing job and income growth, millennials aging into homeownership, and baby boomers living longer and more independently than ever will continue to drive demand and keep the pressure up on the housing market.”