Housing starts fell in July on apartment building slowdown
Housing starts faltered in July on an abrupt slowdown in apartment construction and a modest decline in single-family homebuilding that shows the industry will do little to spur the economy, Commerce Department data showed Wednesday.
Residential starts decreased 4.8% to a 1.16 million annualized rate (the estimate 1.22 million) and multifamily home starts slumped 15.3%. Permits, a proxy for future construction, fell 4.1% to 1.22 million.
Despite overall starts being weighed down by less apartment construction, ground-breaking on single-family properties has declined in four of the last five months. That indicates little support for the economy. While staying close to an almost 10-year high, the pace of one-family homebuilding is being held back by labor and lot shortages, according to construction firms.
At the same time, builders remain optimistic that the market will benefit from strength in the job market and cheap borrowing costs.
"Single-family starts have not risen nearly as much as builder confidence has, reflecting the greater difficulty builders are having obtaining lots and labor relative to past cycles," Mark Vitner, senior economist at Wells Fargo Securities, said in a research note before the report.
The report shows a wide margin for error, with a 90% chance that last month's figure fell between a 15% decline and a 5.4% gain.
Construction of single-family houses eased to an 856,000 rate from 860,000 in June. Groundbreaking on multifamily homes, such as townhouses and apartment buildings, slumped to an annual rate of 299,000 from 353,000.
Starts decreased in three of four regions, including a 15.2% drop in the Midwest and a 1.6% decline in the West.