Fewer housing starts for single- and multi-family homes in the US surprisingly dropped in July. This could affect the possibility of a rebound in the residential market, according to the Commerce Department.
While housing projects decline in that month, it doesn’t necessarily overrule the prospects of certain ventures, such as investing in section 8 housing and other types of property. That is because a recent survey showed that homebuilders became more confident in August due to an increasing demand for new homes.
The Commerce Department data recorded a 4.8% decline in residential starts to an annualized rate of 1.16 million units. Multifamily home and single-family housing starts fell 15.3% and 0.5%, respectively, while construction permits dropped 4.1% to an annual rate of 1.22 million units. Construction of single-family homes dropped 0.5% to 856,000 in July. This segment accounts for the biggest share of the housing market.
Experts said that housing starts for single-family properties failed to increase almost as much as builder confidence. This trend stemmed from increasingly tougher opportunities for developers to acquire land and find skilled workers.
Property developers said that a shortage of developable land and hiring framers are among the distinct challenges that prevent more construction. In addition, companies need to deal with the increasing cost of construction materials.
The increase in prices has already been evident even before the federal government imposed anti-subsidy duties in April, which covered imports of Canadian softwood lumber. These challenges are dampening prospects for a rebound in the housing market, despite a strong demand.
The level of construction for new homes in July partly indicated the pace of economic growth. While the Commerce Department recorded a decline, the uptick in demand for new properties may encourage investors to hold on to their residential portfolios.