July Housing Starts: Starts are Strengthening Again

• Housing starts increased to 1.45 million (SAAR) in July, up 3.9% from revised June 2023 figures and up 5.9% from July 2022, according to the U.S. Census Bureau. 
• Single family housing starts increased to 0.94 million (SAAR) in July, up 6.7% from June.
• Housing permits issued in June were up 0.1% from June and down 13% from a year ago, to 1.44 million (SAAR). 
• 1.32 million (SAAR) homes were completed in July, down 11.8% from June and down 5.4% year-over-year.

What happened: Housing starts are increasing while permits and completions are falling back. 

Why this matters: Despite homebuilder confidence slipping for the first time this year in July, housing starts remain strong with the largest annual increase in starts in over a year. Permitting activity has remained in line with recent months and completions decreased - but that is following about a year from when permits and starts really started declining, so there were fewer homes in the pipeline to complete. 

What Zillow Senior Economist Nicole Bachaud thinks: Homebuilder sentiment fell for the first time this year signaling that affordability constraints putting home buyers on the sidelines may be impacting builder confidence. However, housing starts still came out of the gate strong in July - up from a year ago - so builders still seem to be optimistic enough that there will be demand for new homes moving forward. Completions were down in July, but that is about one year after permits and starts began their descent, leaving fewer homes in the pipeline and thus dampening completions. New construction remains a vital source of new inventory in this market, with many builders still offering incentives that allow for more buyers to find opportunities in the new homes market, so continuing to build is important to the overall health of this market.