NAHB weighs in on soft starts
High interest rates for construction and development loans as well as ongoing challenges regarding labor shortages and higher prices for many building materials continued to slow the building market this summer.
Compared to July of 2023, total starts were down 16.0 percent.
“The decline in new home construction mirrors our latest builder surveys, which show that buyers remain concerned about challenging affordability conditions and builders are grappling with elevated rates for builder loans, a shortage of workers and lots, and supply chain concerns for some building materials,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and custom home builder from Wichita, Kansas.
NAHB Chief Economist Robert Dietz expressed hope for a cut in the interest rates.
“Better inflation data points to the Federal Reserve moving to cut interest rates possibly as early as September, and with interest rates expected to moderate in the months ahead, this will help both buyers and builders who are dealing with tight lending conditions,” Dietz said.
Overall housing starts decreased 6.8% in July to a seasonally adjusted annual rate of 1.238 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the lowest pace since May 2020.
The July reading of 1.24 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 14.1% from an upwardly revised June figure to an 851,000 seasonally adjusted annual rate. However, on a year-to-date basis, single-family starts are up 11.4%. The multifamily sector, which includes apartment buildings and condos, increased 14.5% to an annualized 387,000 pace.
