U.S. housing starts rose 5.2% in July to a seasonally adjusted annual rate of 1.428 million units, driven by a surge in apartment construction.
Why it matters: The increase in housing starts suggests some resilience in the housing market despite high mortgage rates and economic uncertainty.
The details:
- Single-family housing starts increased 2.8% to a rate of 939,000 units in July.
- Permits for future single-family homebuilding edged up 0.5% to a rate of 870,000 units.
- Groundbreaking for multi-family projects of five or more units rose 11.6% to an annual rate of 470,000 units, the highest level since May 2023.
- Total permit issuance, a guide for future activity, fell 2.8% to a five-year low of 1.354 million units, led by a nearly 10% drop in multi-family project permits.
High mortgage rates continue to impact the market, but recent indications of a softening job market have led investors to expect a rate cut from the Federal Reserve in September.
What they’re saying:
- “For Q3, we expect residential investment will drag on GDP growth, but that should reverse in Q1 2026,” Jeffrey Roach, chief economist at LPL Financial, wrote in a note.
The other side: Despite the uptick in July, residential investment remains a drag on overall U.S. economic output.
What’s next: Sustained growth in the housing market will likely depend on the trajectory of mortgage rates and broader economic conditions.
