Housing Starts decreased to 1.534 Million Annual Rate in July

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately‐owned housing starts in July were at a seasonally adjusted annual rate of 1,534,000. This is 7.0 percent below the revised June estimate of 1,650,000, but is 2.5 percent above the July 2020 rate of 1,497,000. Single‐family housing starts in July were at a rate of 1,111,000; this is 4.5 percent below the revised June figure of 1,163,000. The July rate for units in buildings with five units or more was 412,000.

Building Permits:
Privately‐owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,635,000. This is 2.6 percent above the revised June rate of 1,594,000 and is 6.0 percent above the July 2020 rate of 1,542,000. Single‐family authorizations in July were at a rate of 1,048,000; this is 1.7 percent below the revised June figure of 1,066,000. Authorizations of units in buildings with five units or more were at a rate of 532,000 in July
emphasis added

The first graph shows single and multi-family housing starts for the last several years.

Multi-family starts (red, 2+ units) decreased in July compared to June.   Multi-family starts were down 16% year-over-year in July.

Single-family starts (blue) decreased in July, and were up 12% year-over-year (starts slumped at the beginning of the pandemic, but picked up in July 2020). 

The second graph shows total and single unit starts since 1968.

The second graph shows the huge collapse following the housing bubble, and then the eventual recovery (but still not historically high).

Total housing starts in July were well below expectations, however starts in May and June were revised up slightly.

The third graph shows the month to month comparison for total starts between 2020 (blue) and 2021 (red). 

Starts were up 2.5% in July compared to July 2020.  The year-over-year comparison are more difficult starting in the second half of 2021.

In 2020, starts were off to a strong start before the pandemic, and with low interest rates, and little competing existing home inventory, starts finished 2020 strong.  

Starts were solid in the first half of 2021.

The fourth graph shows starts under construction, Not Seasonally Adjusted (NSA).

Red is single family units. Currently there are 711 thousand single family units under construction (NSA). This is the highest level since 2006.

For single family, most of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays.

Since most of these are already sold, it is unlikely this is “overbuilding”, or that this will impact prices.   

Blue is for 2+ units. Currently there are 686 thousand multi-family units under construction.  Last month, at 691 thousand units, was the most since 1974.

For multi-family, construction delays are probably also a factor. Census will release data next year on length of time from start to completion, and that will probably show long delays in 2021. The completion of these units should help with rent pressure.

Combined, there are 1.397 million units under construction. This is the most since July 2006.