Building permits decline again despite jump in starts

Summary

Permits tell the real story

Total housing starts surprised to the upside and jumped 5.2% in July. Although single-family and multifamily starts both improved during the month, another drop in building permits suggests that residential construction remains under pressure from high interest rates and unfavorable supply conditions.

Notably, single family construction is pulling back as builders seek to balance high inventory levels with lack-luster demand on account of elevated mortgage rates and better availability in the resale market.The NAHB Housing Market Index fell in August, suggesting further near-term single-family weakness is in store

Meanwhile, robust apartment demand and easing supply are factors supporting a turnaround in multifamily development. Apartment demand has strengthened this year amid ongoing affordability challenges in the single-family market. Although still elevated, apartment vacancy rates look to have peaked and are gradually ticking lower.

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