July Brings a Pull Back in Both Single-Family and Multi-Family Construction
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Higher Mortgage Rates Upend Residential Construction
- Total housing starts fell 9.6% during July. The drop equates to an 8.1% year-over-year decline. The drop was broad-based, with single-family starts declining 10.1%, and multifamily starts falling 8.6%.
- Upward revisions to starts during June helped take some sting out of July’s sharp decline. Both single-family and multifamily starts were revised slightly higher.
- Single-family starts have now declined on a sequential basis for five consecutive months. The pull-back is primarily owed to higher mortgage rates, which have significantly worsened affordability and caused buyers to head to the sidelines.
- Single-family starts ran at a 916,000-unit pace during the month. For historical context, July’s pace is still stronger that the pace averaged in 2019 as a whole before the pandemic ignited a surge in new construction.