Renter Nation Returns: Multi-Family Unit Starts Hit 2 Year Highs But Permits Plunge

On the heels of homebuilder sentiment hitting COVID lockdown lows…

Source: Bloomberg

…US housing starts and permits data was mixed in July with Starts surging 5.2% MoM (far better than expected and following an upwardly revised 5.9% MoM jump in June). However, Building Permits disappointed, dropping 2.8% MoM (vs 0.5% MoM decline expected)…

Source: Bloomberg

This is the fourth month in a row of declining building permits (the most forward-looking indicator for the US housing market), now at its lowest since the COVID lockdowns…

Source: Bloomberg

The decline in Permits was dominated by multi-family units (down 9.9% MoM) while Housing Starts saw multi-family units jump 11.6% MoM in July (after surging 34.5% MoM in June)…

Source: Bloomberg

The number of multi-family unit starts is at the highest since June 2023…

Source: Bloomberg

But, and it’s a big but, there is a big housing problem: US home construction pipeline is hopelessly clogged up, with completions crashing to 3 year low as builders prefer to hold off completing current units rather than go to market now, as they expect even higher prices.  

Source: Bloomberg

Cartel behavior to limit supply? Or did the deportation of all those illegals leave the country without anyone who knows how to build a house?

The question we have for the new guy at the BLS is simple – if housing construction is crashing, why aren’t construction jobs?

Source: Bloomberg

It appears Renter Nation is back and home (buying) affordability remains at historically lows

Will lower Fed Fund rates do anything to lower mortgage rates? Or will the implied curve steepening further crush affordability? Dear Mr. Trump, be careful what you wish for.