US housing starts fell more than expected in July amid declines in both single and multi-family units, while building permits jumped to a five-month high, government data showed Tuesday.
Starts plunged 12% sequentially to a seasonally adjusted rate of 1.24 million units last month, the Census Bureau and the Department of Housing and Urban Development said. The consensus was for a 5.9% decline to 1.35 million in a survey compiled by Bloomberg.
June housing starts were revised down to 1.42 million units from 1.43 million, reflecting a nearly 20% month-on-month jump.
The single-family component decreased 9.9%, while starts on buildings with at least five units slid about 16%. Consolidated housing starts slumped in the Midwest, South and West fell by double digits, while the Northeast saw a 17% jump, the data showed.
Highlighting what Truist Securities described as a mixed set data, the firm noted "a very poor result from single family starts."
"Builders are still focused on keeping spec inventory down, and we do not see this dynamic changing unless absorption rates start to meaningfully improve," Truist Senior Analyst Jonathan Bettenhausen said in a note e-mailed to.
A "spec house" is a home built with no buyer lined up in advance.
Building permits, which is a forward-looking indicator of homebuilding, rose by 5% sequentially to the highest in five months at 1.44 million units in July, exceeding the 1.38 million consensus.
"There is a lot of seasonal noise in this data, but the fact that permits are running significantly higher than starts offers some encouragement that the weakness in starts is at least somewhat exaggerated," Jefferies Chief US Economist Thomas Simons said in a note e-mailed to.
Separately, US pending home sales dropped 2.3% sequentially in July, data from the National Association of Realtors showed Tuesday. The consensus was for sales to be flat in a survey compiled by Bloomberg. All four major US regions logged decreases in sales, NAR data showed.
"The highest mortgage rates of the year hit right in the middle of summer, and that's pulling back contract signings," NAR Chief Economist Lawrence Yun said. "Home prices are at record highs so houses for sale are sitting on the market longer, and fewer buyers are bidding above the asking price than a year ago, though there are large local market variations."
On Monday, the National Association of Home Builders and Wells Fargo said homebuilder confidence in the US unexpectedly ticked higher this month, although builders continued to deal with rising construction costs amid a renewed surge in gas and diesel prices.
