July housing starts: Disappointing, but there’s room for optimism

August 16, 2017

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By Scott Volling

July housing starts came in at a seasonally adjusted rate of 1,155,000, 5.3% below the consensus of 1,220,000 and 5.6% lower than July of 2016.  With June starts generating optimism after halting three straight months of declines, the July data is disappointing and may indicate that full year projections of 1.25M to 1.3M starts may be optimistic.

However, we see two reasons to maintain some level of optimism.  First, July permits were up 4.1% over last year to 1,223,000 and the June permit number was revised upward to a strong 1,275,000, signaling potential strength in starts over the coming months.  Second, single family starts rose 10.9% from last year to 856,000.

Combined with June’s upwardly revised 860,000 single family starts, this is the strongest 2-month result for single family starts since fall of 2007, as builders continue to prioritize addressing the pent up demand for single family homes.

The volatile multi-family number came in at 287,000, down 20% from June and 35% from July 2016.

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