Housing construction rallied in July, according to the monthly construction report issued today (Tuesday, Aug. 18) by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).
Leading the way was a seasonally adjusted annual rate of 1,496,000 privately owned housing starts in the month, a 22.6% increase above June's revised estimate of 1,220,000 and 23.4% above July 2019's 1,212,000 housing starts nationwide.
Building permits followed closely at a seasonally adjusted annual rate of 1,495,000, up 18.8% from June's 1,258,000 and 9.4% above the July 2019 rate of 1,366,000, the agencies said in their report.
Housing completions, meanwhile, came in at a seasonally adjusted annual rate of 1,280,000, 3.6% above June's revised rate of 1,236,000 completions and 1.7% above last July's rate of 1,258,000.
A look at the numbers shows buildings with five units or more showed the sharpest growth rates, and the rates also varied somewhat by region in a housing market widely considered to be on the rebound nationally.
The census report released today also jibes with other reports out this week, including record-high builder confidence recorded by the National Association of Home Builders and Fannie Mae's economic forecast that shows housing leading a general economic recovery from the pandemic.
Gains by construction type
The report found similar gains when broken down by new construction type. For instance, single-family authorizations recorded a July seasonally adjusted rate of 983,000, 17% above June's revised 840,000 units and up 15.5% from July 2019.
Authorizations for buildings with two to four units, meanwhile, were up 12.5% month over month at 45,000 units and down 2.2% compared with July 2019, while authorizations for apartment buildings and condos with five units or more recorded a July rate of 467,000 units, 23.5% more than June and off slightly, 0.4%, from July 2019.
Meanwhile, single-family starts were up 8.2% month over month to a seasonally adjusted rate of 940,000 and also up 7.4% from July 2019, while starts for buildings with five units or more came in at a rate of 547,000 in July, a 56.7% jump from June and up 67.8% from July 2019. The report said there was not enough data to report starts for buildings with two to four units among the tally of total housing starts for the month.
Completions, meanwhile, were at a seasonally adjusted rate of 909,000 for single-family homes, down 1.8% from June and 0.4% from July 2019. Completed buildings of five units or more were at a seasonally adjusted rate of 364,000, up 19.3% from June and 9.0% in July 2019, respectively.
New permits and starts by region
All four regions showed month-over-month growth in new permits for all housing types authorized in July, led by the West at 29.1%, followed by the Midwest at 23.8%, the Northeast at 14.8%, and the South at 13.7%. Compared with July 2019, new authorizations were up 32.5% in the Midwest, 8.3% in the South, 6.9% in the Northeast, and 1.9% in the West.
These privately owned housing starts, meanwhile, were largely driven upward by multifamily units. Those percentage increases for all housing types from June to July by region (with the percentage change for single-family starts in parentheses for comparison) were 35.3% in the Northeast (-2.6%), 33.2% in the South (13.3%), 5.8% in the Midwest (-0.8%), and 5.8% in the West (6.2%).
Compared with July 2019, the growth was even more dramatic. The Northeast posted a year-over-year gain of 63.5% (23.3% for single-family units) while the South was at 33.0% (12.3%), the Midwest was at 15.5% (6.5%), and the West was down 3.1% from July 2019 overall and 6.8% down in single-family housing starts.
Completions by region
From June to July, the Northeast was up 57.7% for all types and up 35.1% for single-family units. The West, meanwhile, was up 13.2% overall and single-family completions were down 2.1%. In the South, overall completions were up 1.7% for the month and down 1.2% for single-family houses, and the Midwest was down a sharp 26.6% overall and down 19.8% in single-family units.
A slightly different pattern emerges when comparing the seasonally adjusted rate of new residential construction completed in July with July 2019. There, the West was up 24.5% overall and 18.4% in single-family unit completions, the Northeast was up 6.7% overall and up 11.6% for single-family units, the South was up 0.3% overall and down 5.4% in single-family units, and the Midwest was down 29.6% from July 2019 overall and down 16.0% for single-family completions.
Confidence particularly in multifamily, and a recovery
The joint U.S. Census-HUD report shows that the new construction market is showing life after the pandemic nearly ground construction, and interest in investing in new projects, to a halt in the spring.
The surge in multifamily permits and starts in particular drove the numbers in many parts of the country. Such future construction could help ease the housing shortage in places that are seeing that crunch, and that may be the areas where housing demand is driving this new activity.
Whether this new activity is a good bet by investors and homeowners, of course, depends on the economy and people recovering from the pandemic. Low mortgage rates and new inventory can only go so far to spur sales and leases in a housing market facing such pressures.