July Housing Starts: Foot on the Gas

• July housing starts rose 22.6% from June, to 1,496,000 (SAAR), and were up 23.4 percent from a year ago, according to the U.S. Census Bureau.
• Building permits were up 18.8% from June and up 9.4% from July 2019, to 1,495,000.
• Housing completions rose 3.6% from June and are up 1.7% from July 2019

Based on recent positive homebuilder optimism and homebuyer trends, it’s no surprise that July’s home construction figures are strong. Sentiment among homebuilders has recently surged to record levels as builders see increased buyer interest in new construction homes, and that optimism appears to have directly translated into a remarkable pace of building. Housing starts through July are up 4.3% year-to-date, compared with 2019. Newly-built homes seem to have also become more popular in recent months, in part due to a shortage of existing for-sale homes, but another theory is a growing desire among home shoppers for a new, never lived-in house. However, threats to this optimistic outlook remain and may be on the rise. High levels of unemployment and the uncertain future of the next wave of fiscal relief are two strong headwinds that may impact the housing market. Home construction is also a slow-moving process that is often slow to respond to changing trends. But given the enduring inventory shortage, and still-rising home buying activity -- for the time being -- there appears to be very little reason for builders to take their foot off the gas pedal anytime soon.