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Housing Starts Drop 9.6 Percent, Now Below Pre-Pandemic Level, Led By Single Family

Economists are like a broken record, continually overestimating demand for housing. Starts badly missed economists' expectations as did builder sentiment yesterday.
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New Residential Construction data from Census Department, chart by Mish

New Residential Construction data from Census Department, chart by Mish

New Residential Construction

The Census Department New Residential Construction Report shows accelerating weakness in housing starts led by single-family units.

Housing Starts 

  • Privately‐owned housing starts in July were at a seasonally adjusted annual rate of 1,446,000. This is 9.6 percent below the revised June estimate of 1,599,000 and is 8.1 percent below the July 2021 rate of 1,573,000. 
  • Single‐family housing starts in July were at a rate of 916,000; this is 10.1 percent below the revised June figure of 1,019,000. 
  • The July rate for units in buildings with five units or more was 514,000. 

Housing Completions 

  • Privately‐owned housing completions in July were at a seasonally adjusted annual rate of 1,424,000. This is 1.1 percent above the revised June estimate of 1,409,000 and is 3.5 percent above the July 2021 rate of 1,376,000. 
  • Single‐family housing completions in July were at a rate of 1,009,000; this is 0.8 percent below the revised June rate of 1,017,000. 
  • The July rate for units in buildings with five units or more was 412,000.  

Building Permits 

  • Privately‐owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,674,000. 
  • This is 1.3 percent below the revised June rate of 1,696,000, but is 1.1 percent above the July 2021 rate of 1,655,000. 
  • Single‐family authorizations in July were at a rate of 928,000; this is 4.3 percent below the revised June figure of 970,000. 
  • Authorizations of units in buildings with five units or more were at a rate of 693,000 in July. 

Housing Starts, Permits, Completions Not Seasonally Adjusted

Housing Starts, Permits, Completions NSA 2022-07

The raw, unadjusted numbers put the numbers in perspective. Seasonally-adjusted annualized (SAAR) starts were 1.446 million. Actual starts in July were 131,000.

Housing Starts Single Family vs Multi-Family 

Housing Starts Single Family vs Multi-Family 2022-07

Single-Family Leads Decline

The housing crash is led by single-family constructions as mortgage rates, recession fears, and falling prices have caused buying plans to shrink.

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In November of 2021 there were 1.22 million starts SAAR. In July of 2022 there were 916,000. That's a 24.9 percent decline, now accelerating.

Single-family starts have fallen four consecutive months.

Bloomberg Economists Expectations

The Bloomberg Econoday consensus was 1.54 million starts vs 1.446 million actual.

Yesterday, Econoday commented "The housing market index crashed in July, tumbling 12 points for the single biggest decline on record. Forecasters see a 55 score for August that would match July. Warning to readers! This index has missed Econoday's consensus each and every report so far this year."

And miss again they did. The housing market index took another dive to 49.

NAHB Sentiment Declines Eighth Consecutive Month Into Negative Territory

Yesterday, I noted NAHB Sentiment Declines Eighth Consecutive Month Into Negative Territory

Builders have a big problem, especially on housing units started on speck. 

Despite Plunging Lumber, the Cost of Building a Home Remains Stubbornly High

This post originated on MishTalk.Com.

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