Despite a challenging market overall and supply-side headwinds, single-family housing starts posted modest gains in July.
Private starts in July ran at a seasonally adjusted annual rate of 1,428,000, 5.2% above the June estimate, according to the U.S. Department of Housing and Urban Development and U.S. Census Bureau. Single-family housing starts in July were at a rate of 939,000, 2.8% above the June estimate. Single-family starts are down 4.2% on a year-to-date basis, though, according to the NAHB.
“The slowdown in single-family home building has narrowed the home building pipeline,” said NAHB chief economist Robert Dietz. “There are currently 621,000 single-family homes under construction, down 1% in July and 3.7% lower than a year ago. This is the lowest level since early 2021 as builders pull back on supply.”
On a regional and year-to-date basis, single-family and multifamily starts were 10.2% higher in the Northeast, 17.7% higher in the Midwest, 2.4% lower in the South, and 0.5% lower in the West.
Private housing completions increased 6.0% on a month-over-month basis to 1,415,000 in July. This rate is still 13.5% below the July 2024 rate, though, according to the U.S. Census Bureau. Single-family housing completions ran at a seasonally adjusted annual rate of 1,002,000 in July, 11.6% higher than the June rate.
Overall permit activity decreased 5.7% on a year-over-year basis to 1,354,000. Single-family permit authorizations increased marginally from June by 0.5% to a rate of 870,000.
Despite the moderate gains in housing starts, builders remain skeptical about the overall housing market. The NAHB/Wells Fargo Housing Market Index (HMI)—a measure of home builder sentiment—decreased one point to 32 in August. Builder sentiment has now been in negative territory for 16 consecutive months. Confidence remains weighed down by high mortgage rates, weak buyer traffic, and ongoing supply-side challenges.
“Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward,” said NAHB chairman Buddy Hughes. “Builders are also grappling with supply-side headwinds, including ongoing frustrations with regulatory policies connected to developing land and building homes.”
The August HMI survey indicated 37% of builders cut prices in August and 66% of builders used sales incentives during the month, the largest share in the post-COVID period.
The HMI index gauging current sales conditions declined by one point in August while the component tracking sales expectations in the next six months held steady. The index measuring traffic of prospective buyers posted a two-point gain but remained at a significantly low reading of 22. Each of the three HMI component indices measured at a reading below 50 in August, meaning more builders view conditions as poor than good.
