Construction Activity Edges Up in July; Remains Weak

By Mark Lieberman

Managing Director and Senior Economist


  • Home building activity, measured by housing permits and starts EDGED UP in July, led by single-family activity;
  • The seasonally adjusted annual rate of Single-family permits ROSE a 1.9 percent while single-starts were UP 0.9 percent;
  • As a share of the increase in all permits, single-family activity represented 84 percent and of starts, 80 percent;
  • Multi-family permits were UP 0.7 percent as did multi-family starts;
  • The rate of housing completions though FELL 1.7 percent, as single-family completions plummeted but multi-family completion increased month-month


  • The month-month improvement in housing permits was the first in four months;
  • The SAAR of both permits and starts is down since the beginning of the year; permits are off by less than 1 percent, but the rate of starts is off almost 3.5 percent;
  • The pace of new home completions has now fallen for three straight months and for four of the last five months;

Data Source: Census Bureau and Department of Housing and Urban Development 

Image result for home building

Just one day after the National Association of Home Builders reported yet another dip in builder confidence, the Commerce Department provided an explanation in a report showing weak gains in new residential activity.

The Housing Market Index, NAHB’s yardstick for builder confidence slipped one point in August though it remains strongly positive at 67.

The index, though labeled as the August reading, is largely based on July activity which continued to show challenges for the housing sector borne out by the Commerce data. The sector must still deal with stagnant earnings, rising mortgage rates and higher material costs as a consequence of higher tariffs.

According to Freddie Mac, though the average rate for a 30-year fixed rate mortgage dipped to 4.53 percent last week from 4.59 percent one week earlier, it remains noticeably higher than the 3.89 percent rate a year ago.  The difference would cost a borrower about $112 a month on a 39-year $300,000 mortgage.

The seasonally adjusted annual rate of housings starts was about 1.6 million in January 2006 and fell to under 500,000 at the depths of the Recession. Thursday’s report of a SAAR just under $1.2 million, suggests home construction still has a long way to go.

Of course, the reduced inventory of new homes has affected sales. The seasonally adjusted annual rate of new home sales in June was 631,000, down from a pre-Recession high of nearly 1.4 million.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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