US housing sector starts showing cracks as new residential construction data shows a dip

Both privately-owned housing starts and single‐family housing starts fell in July which could be due to the rate hikes and the rising inflation in the US.

US housing sector starts showing cracks as new residential construction data shows a dip
The once booming US housing sector is showing cracks in the New Residential Construction numbers.

The rising interest rate is already showing its impact on the US economy. The once booming US housing sector is showing cracks in the New Residential Construction numbers. Both privately-owned housing starts and single‐family housing starts fell in July which could be due to the rate hikes and the rising inflation in the US. Are Americans postponing their home ownership plan or has the tide turned – remains to be seen.

The privately-owned housing starts in July 2022 stood 9.6% lower than the revised June 2022 estimates. The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the new residential construction statistics for July 2022 on August 16, 2022. For July 2022 privately-owned housing starts were at a seasonally adjusted annual rate of 1,446,000 which was below the revised June 2022 estimate of 1,599,000.

Housing starts have become a key economic indicator that reflects the buying power of individuals and the strength of the housing sector. The housing industry, in turn, has an impact on several other sectors of the economy and thus plays a role in determining the direction in which the economy is moving.

Also Read: Is Elon Musk buying English football club Manchester United?

New Residential Construction numbers for July 2022 stand at:

Building Permits: 1,674,000
Housing Starts: 1,446,000
Housing Completions: 1,424,000

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, which 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
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 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.

Also Read: ‘Big Short’ Michael Burry sells all stocks except one – Check portfolio

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 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.

The New Residential Sales figures released on July 26, 2022, showed sales of new single-family houses in June 2022 at a seasonally adjusted annual rate of 590,000 which was 8.1 percent below the revised May 2022 estimate of 642,000.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos