Financial News: U.S. Housing Starts Plunge 12.4% In July, Much

U.S. Housing Starts Plunge 12.4% In July, Much More Than Expected

(RTTNews) - After reporting a spike in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Tuesday showing housing starts plummeted by much more than expected in the month of July.

The Commerce Department said housing starts nosedived by 12.4 percent to an annual rate of 1.239 million in July after skyrocketing by 19.7 percent to a revised rate of 1.415 million in June.

Economists had expected housing starts to plunge by 5.4 percent to an annual rate of 1.350 million from the 1.427 million originally reported for the previous month.

The much steeper than expected monthly drop in housing starts reflected significant decreases in both single-family and multi-family starts.

The report said single-family starts plunged by 9.9 percent to an annual rate of 808,000, while multi-family starts dove by 16.8 percent to an annual rate of 431,000.

"Topline housing starts have followed a see-saw pattern in recent months, largely due to volatility in multifamily construction," said Nationwide Financial Market Economist Oren Klachkin. "But single-family starts also dropped sharply in July as builders contend with elevated inventory levels and rising costs for materials and labor."

He added, "Until mortgage rates decline and allow builders to unload currently completed homes or those under construction, we expect home builders to remain hesitant to make significant investments in new projects."

Meanwhile, the Commerce Department said building permits surged by 5.0 percent to an annual rate of 1.443 million in July after tumbling by 2.6 percent to a revised rate of 1.374 million in June.

Building permits, an indicator of future housing demand, were expected rise by 0.2 percent to an annual rate of 1.370 million from the 1.367 million originally reported for the previous month.

Multi-family permits led the way higher, spiking by 9.6 percent to an annual rate of 549,000, while single-family permits jumped by 2.5 percent to an annual rate of 894,000.

"The lift in building permits indicates that housing starts should rebound again in August, although this was led again by the multifamily space," said Klachkin. "Demand for rental housing is outpacing owner-occupied in many local markets as affordability concerns have been exacerbated by the rise in mortgage rates."

He continued, "We except little improvement in single-family constriction over the rest of 2026 with mortgage rates likely to remain near current levels for some time."

The National Association of Home Builders released a separate report on Monday unexpectedly showing a modest improvement in U.S. homebuilder confidence in the month of August.

The report said the NAHB/Wells Fargo Housing Market Index ticked up to 35 in August from 34 in July. Economists had expected the index to edge down to 33.

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