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First Cut: Housing starts down in July on multi-units while single-family gains ground

Starts of new housing in July was down 4.0% to 1.191 million units (SAAR) from June. However, the decrease was concentrated in the volatile multi-unit sector with a steep 16.2% drop to 315,000 units while single-family homes were up 1.3% to 876,000 units. Starts were up 0.6% compared to July 2018 with a similar breakdown. Single-family starts were up 1.9% and multi-units were down 2.8%.

Month-to-month gyrations in the report should not disguise that builders are constructing new homes at a pace that reflects renewed activity in the residential housing market.

Starts of homes were down in three of four regions. The Northeast retraced some of a large gain in June with a 13.8% decline in July. The Midwest also declined after a jump in the prior month and was down 6.2% in July. The South saw a second month in a row of declines, but at a slower down 4.3%. The West had an increase of 1.3% after three months of declines.

Permits-issued for July rebounded after the sharp decline in the prior month. Total permits were up 8.4% to 1.336 million units (SAAR), the strongest since 1.339 million in December when demand got a boost from the destruction of housing stock from natural disasters in October and November.

Single-family permits were up 1.8% in July from June while multi-units were jumped 21.8%.

Compared to a year ago, permits were up 1.5% overall, and down 3.8% for single-family and up 11.9% for multi-units. With limited supplies of smaller existing units for entry-level homebuyers and downsizing current homeowners, builders have shifted to providing some smaller homes, and townhouses and condos.

Permits in the South rose 10.7% and were up 13.7% in the West. These were down 3.3% in the Northeast and 1.2% in the Midwest.

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