Housing starts slightly increased 0.9% in July, according to the latest report from the U.S. Census Bureau.
Privately owned housing starts increased in July to a seasonally adjusted annual rate of 1.17 million, up 0.9% from June’s 1.16 million, however this is down 1.4% from the annual rate of 1.19 million in June 2017.
Single-family housing starts increased 0.9% month-over-month to a rate of 862,000, up 0.9% from 854,000 in June.
The July rate for units in buildings with five or more units dropped to a seasonally adjusted rate of 303,000, a decrease from 304,000 in June.
Building permits, increased from July both monthly and annually. Privately-owned housing units authorized by building permits climbed 1.5% from 1.29 million in June to a seasonally adjusted annual rate of 1.31 million in July. This is up 4.2% from 1.26 million in June 2017.
"Builder confidence remains solid, although it has fallen back somewhat in recent months due to rising construction costs in 2018, including lumber," National Association of Homebuilders Chairman Randy Noel said "As builders grapple with higher costs, one positive development is that lumber prices have shown signs of easing the past two months off their record high levels posted in June."
Privately owned housing completions decreased at seasonally adjusted annual rate of 1.19 million in July, and also down 1.7% from June’s 1.20 million. Notably, this is 0.8% below 1.20 million in June 2017.
Single-family housing completions decreased 5.2% from the 859,000 reported in June to a rate of just 814,000 completions in July.
PricewaterhouseCoopers Principal Scott Volling said that homebuilders are being affected by a slight increase in inventory.
“While for sale inventory is still at historical lows, there has been an uptick in the last month or two, slightly easing supply constraints and perhaps providing more options for prospective buyers, ultimately hurting the builders,” Scott Volling said. “Further, mortgage rates continue to tick upward, and builders may be muting how aggressive they build based on internal projections of future shifts in demand. June appeared to be an anomaly, but July results indicate a trend.”
Volling said with permits still fairly solid, it’s important to monitor if the trend continues into the late summer/early fall. This will help indicate if recent permits translate to stronger starts in the coming months.