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New data from the U.S. Census Bureau shows that privately-owned housing starts in July sat at an annual rate of 1.446 million, a 9.6% month-over-month decrease and a drop of 8.1% year-over-year. |
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| This data highlights the ongoing struggle builders are having with material shortages and high interest rates. According to Logan Mohtashami of Housing Wire, this data shows that:
Homebuilders are going to be done with single-family construction until mortgage rates fall. Housing completion data is still struggling to get some traction, but in the coming months, builders should be able to get more housing completions done while housing permits and starts for single-family homes are in decline. If it wasn’t for solid rental demand boosting multifamily construction this year — 18% year to date —this data line would have looked much worse. Expect this downward trend to continue. Candyd Mendoza of MPA quotes Kelly Mangold, principal at RCLCO Real Estate Consulting, who comments that “[d]espite these challenges, the housing market continues to be undersupplied, which should alleviate concerns of any type of market crash – and there is starting to be evidence that pricing may be adjusting somewhat in light of market conditions.” Lawrence Yun of the National Association of Realtors (NAR) comments on the data, noting that in addition to the low start data, demographic trends point to a longer-term housing shortage. That said, supply chain issues are easing which will give builders a boost, and completed homes are being sold within 3 months which shows the robustness of the housing market. Reade Pickert of Bloomberg reports on the increase in canceled deals, where around 63,000 agreements to purchase were canceled last month, about 16% of total properties under contract. “While deals fall through for a range of reasons in normal times, the percentage of cancellations has been ticking up as sales slow down and borrowing costs rise.” Source: U.S. Census Bureau (August 2022) |