Single-family housing permits and starts expanded in July, a sign that the National Association of Home Builders says indicates that housing demand and construction remain a bright spot for the overall economy.
Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,496,000. This is 22.6% above the revised June 2020 estimate of 1,220,000, U.S. Census data shows. The July reading of 1.50 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 8.2% to a 940,000 seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 58.4% to a 556,000 pace.
Low interest rates and a renewed focus on home life have spurred housing demand. In terms of economic impact, NAHB says there were 503,000 single-family homes under various stages of construction in July. The count appears to be rising again, after declines in February to June. This does represent a 3% year-over-year decline however.
“Strong builder confidence and heavy buyer traffic point to further production gains in the near term, but the more than 110% jump in lumber prices since mid-April is adding approximately $14,000 to the cost of each new single-family home,” said Chuck Fowke, chairman of the NAHB and a custom home builder from Tampa, Fla.
Consistent with recent gains in the NAHB/Wells Fargo Housing Market Index (HMI), which shows that builder confidence has risen to match a record high, 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.
On a regional and year-to-date basis (January through July of 2020 compared to that same time frame a year ago), combined single-family and multifamily starts are 9.3% higher in the Northeast, 5.9% higher in the Midwest, 5.2% higher in the South and 1.4% higher in the West.
Overall permits increased 18.8% to a 1.50 million unit annualized rate in July. Single-family permits increased 17.0% to a 983,000 unit rate. Multifamily permits increased 22.5% to a 512,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 3.2% higher in the Midwest, 5.4% higher in the South, 6.2% lower in the Northeast and 1.6% lower in the West.