Housing starts couldn't hold the 1.200 million annualized line in July, falling to a lower-than-expected 1.155 million. The rate is now back to the weakness of March and April in what may be emerging as a declining trend this year. Permits also fell but are holding over 1.200 million, at 1.223 million which is down from June's 1.275 million but with this trend holding up better.
The swing factor is multi-family units, the smaller of the report's two components but, after a run of heavy building earlier this year, are now in retreat. Multi-family starts fell to a 299,000 rate in July from June's 353,000 and are down 34 percent year-on-year. Multi-family permits, at 412,000, are down nearly 10 percent.
Single-family data are holding steady with starts at 856,000 for an 11 percent yearly gain and permits at 811,000 and a 13 percent gain.
Putting all the pieces together: starts are down 5.6 year-on-year in weakness offset by permits which are up 4.1 percent. Permits are the forward looking indication in this report and today's news, despite July weakness and general volatility in the data, is good. The housing sector, even with starts being soft, looks to be a contributor to the second-half economy.