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Housing Starts: Decline More Than Expected

August 18, 2021
Bottom Line:  Housing starts fell sharply more than expected in July following June's strong rebound. Looking through the volatility, the trend is still slightly higher, with the overall level of starts still robust relative to history. That said, the level of starts is below the average pace of 202.   And the deceleration in the trend bears watching as we advance, especially since mortgage rates have moved back down in the last month.  Looking forward, building permits were a touch higher, but entirely because of the volatile multifamily sector.  Single-family permits were trending lower.  Overall, housing has provided a critical growth driver since the pandemic, but that tailwind is now slowing.
Housing Starts FELL by 7.0% in July to 1534k, compared with market expectations for a decline to 1600k. Meanwhile, the prior month was revised slightly higher from 1,643k to 1,650k.  Housing starts are now 2.5% ABOVE their year-ago level.  However, they are still a sharp 32.5% BELOW their January 2006 peak.
Single Family Housing Starts
FELL by 4.5% to 1111k. Single family housing starts are 11.7% ABOVE their year ago level but still 39.1% BELOW their January 2006 peak.

Multifamily Housing Starts
FELL by 13.0% to 423k. Multifamily starts are now 15.7% BELOW their year ago level.