After modest gains made in June, new single-family housing starts took a sharp hit in July, according to the U.S. Census Bureau and Department of Housing and Urban Development’s (HUD) new residential construction report.
Single-family housing starts in July 2021 were down 4.5 percent from June revised estimates to a rate of 1,111,000. That figure, however, was still up 11.7 percent from July 2020.
Privately owned housing starts were at a seasonally adjusted annual rate of 1,534,000 in July, down 7 percent from the revised June 2021 estimate of 1,650,000, but up 2.5 percent year over year.
Meanwhile, single-family units authorized by building permits were down 1.7 percent from June to a rate of 1,048,000. Privately owned housing unit permits were at a seasonally adjusted annual rate of 1,635,000, up 2.6 percent from the revised June rate of 1,594,000 and up 6 percent year over year.
Single-family housing completions were 3.6 percent above the revised June rate of 921,000, to a rate of 954,000. Privately owned completions were up 5.6 percent from the revised June estimate to a seasonally adjusted annual rate of 1,391,000. That figure was also up 3.8 percent year over year.
Despite the decline in housing starts in July, which reflected homebuilders’ recently curbed confidence amid mellowing lumber prices, realtor.com Senior Economist George Ratiu said the gains made in permit applications were a positive sign.
“While demand for new homes remains high, the pace of new construction reflected softening homebuilder confidence in June as builders grappled with the opportunity to shore up profitability now that lumber prices are declining from recent spikes,” Ratiu said in a statement emailed to Inman. “Builders pulled back on housing starts, wary of overcommitting on final new home prices in the face of volatile costs for land, materials and labor. However, permit applications and completed homes registered gains, a sign that expectations for the next months remain upbeat.”
After over a year of a market dramatically fluctuating between lows and highs, Ratiu added that this recent data points towards a normalization of the market, which should offer a reprieve to first-time homebuyers struggling to enter the market.
“In the wake of a year and a half of dramatic swings — from a steep drop during the 2020 quarantines to the frenzied pace of 2021’s first half — real estate markets are clearly moving toward normalization,” Ratiu said. “Americans continue to seek the benefits of homeownership, encouraged by low interest rates and the desire for higher quality of life. And for many homeowners who sat on the sidelines this past year, the current seller’s market is motivating them to list their homes later in the season, with new listings rising at a higher rate in July than in a typical year. The number of existing homes coming up for sale has been rising for almost two months, including smaller homes, offering more affordable options to fatigued first-time buyers.”