Eye On Housing
Single-family housing permits and starts expanded in July as housing demand and construction remains a bright spot for the overall economy. Demand is being supported by low interest rates and a renewed focus on the importance of home amid the virus crisis. Single-family starts in July were estimated by Census/HUD at a 940,000 seasonally adjusted annual rate, after a revised estimate of 869,000 for June.
Consistent with recent gains in the NAHB/Wells Fargo Housing Market Index (HMI), which has risen to match a data series high of 78, single-family permits increased 17% in July. Total permits for single-family homes issued in 2020 on a year-to-date basis are are up almost 6% compared to the first seven months of 2019. The increase in the pace of permits and resurgent builder confidence signals more gains for single-family starts ahead.
Looking back, single-family construction has been increasing since setting a recession low in April (679,000 annual pace), although they remain off the pre-recession peak of 1.034 million set in February. This marks a 34% decline from the peak starts pace in February.
Single-family starts, on a year-to-date basis, are 0.9% higher relative to the first seven months of 2019. Thus far, single-family starts are down on a year-to-date basis 1% in the Northeast, up 0.7% in the South, up 3.4% in the Midwest, and up 0.5% in the West (led by the fast growing Mountain states).
Construction starts for 5+ unit multifamily, which includes apartment buildings and condos, increased 57% to a 547,000 pace in July. This reflects a 11% decline for multifamily construction relative to the strong January pace. NAHB’s forecast calls for multifamily construction to decline more than single-family construction as a result of the 2020 downturn, but the current pace of apartment construction is above forecast.
In terms of economic impact, there were 503,000 single-family homes under various stages of construction in July. This count now appear to be rising again, after declines in February to June. This does represent a 3% year over year decline however.
There were 678,000 multifamily units under construction in July. This is almost 10% higher than a year ago.
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