Economists' Outlook

Housing stats and analysis from NAR's research experts.

The Latest Housing Starts

  • Total housing starts surged 15.7% from June to July to 1.093 million in July.  This is the highest pace since November of 2013.  The bulk of the increase came from the multifamily sector, but there was solid growth on the single family side.  CPI inflation eased slightly to 2.0% on a year-over-year basis, providing the Fed more breathing room for its call on raising rates.
  • Single family housing starts are closely watched because they reflect both builder confidence and potential improvements in supply, but also have a strong impact on job creation.  Furthermore, home construction and sales drive consumption of goods and thus jobs in related industries.
  • Single family housing starts rose 8.3% from June to July and were up 10.1% over the last 12 months.
  • Permits for construction of single family units increased 0.9% from June to July.  Sluggish permit growth suggests a soft patch ahead.
  • New home construction is steadily trending upwards, but remains significantly below the 1.06 million annual average from 1980 through 2001.  Limits on financing for construction combined with builders’ concerns about demand from the entry-level portion of the market have hampered an expansion of construction.
  • Headline CPI eased from 0.3% growth in June to 0.1% growth in July and was up 2.0% from a year ago, down from a 2.1% year-over-year reading in June.  A drop in gasoline and energy costs appears to have driven the change, while core inflation was flat at 0.1% on a month-to-month basis.  However, the rent component and owners’ equivalent rent components both increased on a year-over-year basis to 3.3% and 2.7%, respectively.
  • Inflation is closely watched as an indicator of the Fed’s intentions and timing of future rate increases.  The year-over-year rate is back at the Fed’s target of 2.0% (though the Fed prefers inflation measure by the PCE index) suggesting that faster inflation won’t force the Fed’s hand to raise rates earlier than anticipated.

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