While there haven’t been many economic bright spots during the coronavirus pandemic, U.S. housing starts in July might inspire some optimism.
U.S. housing starts in July reached a seasonally adjusted annual rate of 1.496 million, according to the Census Bureau and Department of Housing and Urban Development.
In a recent Reuters poll, economists had forecast a jump to 1.24 million units.
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July housing starts jump 22.6%
July’s housing start rate marked a 22.6% increase from the previous month. Furthermore, July starts increased 23.4% from July 2019.
Housing start activity in July surged to the highest level since January 2020, which reached a seasonally adjusted annual rate of 1.536 million units.
Single-family housing starts came in at a rate of 940,000, up 8.2% from June. The July rate for units in buildings with five units or more reached 547,000.
The Northeast region saw a boom in housing starts activity, rising 35% month over month and 63.5% year over year.
Elsewhere, housing start activity in the South rose 33.2% in July from the previous month. Meanwhile, activity in the West and Midwest jumped 5.8%.
Meanwhile, housing completions reached a seasonally adjusted annual rate of 1.28 million.
July completions marked a 3.6% increase from the previous month. Completions were also up 1.7% on a year-over-year basis.
Building permits authorizing privately-owned housing units came in at a seasonally adjusted annual rate of 1.495 million.
The July permitting rate increased 18.8% month over month. Furthermore, the rate increased 9.4% year over year.
As for permits for single-family homes, the rate reached 983,000, up 17.0% from the revised June figure of 840,000. Authorizations of units in buildings with five units or more were at a rate of 467,000 in July.
Builder confidence, low interest rates
According to the National Association of Home Builders, strong builder confidence and historically low interest rates are fueling the surge in housing starts.
However, materials costs are pushing home price tags upward.
“Strong builder confidence and heavy buyer traffic point to further production gains in the near term, but the more than 110 percent jump in lumber prices since mid-April is adding approximately $14,000 to the cost of each new single-family home,” NAHB Chairman Chuck Fowke said.
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