U.S. Housing Construction Soars in July Even as Future Permits Stall

The U.S. Census Bureau and HUD report that housing starts climbed 5.2 percent in July, reaching 1.428 million units, the strongest pace in five months.

This surge traces mainly to a sharp 11.6 percent increase in multi-family construction, which hit its highest level since May 2023.

Single-family starts rose 2.8 percent, to 939,000 units, marking modest growth. By contrast, building permits dropped 2.8 percent to 1.354 million units, reaching their lowest point in about five years.

Although single-family permits edged up 0.5 percent to 870,000 units, permits for multi-family projects fell sharply—signaling potential cooling ahead.

The market reveals mixed signals. Builders broke ground on more projects this month, yet their expectations dimmed. The NAHB Housing Market Index fell to 32 in August, tying its lowest mark since December 2022.

High borrowing costs continue to weigh. Although the average 30-year mortgage rate eased to 6.58 percent, it remains elevated by historical standards.

Builders responded by trimming prices—over 37 percent of them cut prices, and 66 percent offered sales incentives, both figures at post-pandemic highs.
Reuters

This snapshot points to a construction rebound in the short run, but deepening caution. Elevated mortgage costs, slowing future permits, and weak confidence weigh on outlooks. The housing sector may remain a drag on broader economic growth in the months ahead.