July Housing Starts Log Surprise Gain; Building Permits Fall

12:44 PM EDT, 08/19/2025 (MT Newswires) -- US housing starts unexpectedly increased in July amid gains in single- and multi-family units, though building permits dropped, government data showed Tuesday.

Housing starts rose 5.2% sequentially to a seasonally adjusted annual rate of 1.43 million units last month, according the Census Bureau and the Department of Housing and Urban Development. The consensus was for a 1.8% decrease in a survey compiled by Bloomberg, based on an unrevised print for June.

Starts on buildings with at least five units climbed 12% month on month to 470,000 units in July. The single-family component rose 2.8% to 939,000 units. Consolidated housing starts surged 33% and 19% in the Midwest and South, respectively, while the Northeast and West logged respective drops of 26% and 28%, according to the data.

"We don't see much upside for single-family starts in the near term given a large stockpile of new homes for sale and ongoing affordability challenges for buyers," Oxford Economics Lead US Economist Nancy Vanden Houten said in remarks e-mailed to MT Newswires. "We expect multi-family starts to mostly move sideways in the near term, but the July data suggest some upside risk to that forecast."

Building permits, which is a forward-looking indicator of homebuilding, fell 2.8% sequentially to 1.35 million units last month, below Wall Street's view for 1.39 million. Single-family unit permits edged up 0.5%, while authorizations in buildings with five or more units dropped 9.9%, according to the report.

On Monday, data from the National Association of Home Builders and Wells Fargo showed that homebuilder confidence in the US unexpectedly deteriorated in August amid high mortgage rates and persistent supply-side challenges.

"As the (Federal Reserve) returns to interest rate reductions over the coming months, some support will be provided to the homebuilding market, but the expected implementation of lumber tariffs, on top of 50% tariffs on imported steel, aluminum, and copper, will likely continue to restrain homebuilding through the second half of the year," Andrew Foran, an economist at TD Economics, said in a report published Tuesday.

Markets are currently pricing in an 85% probability that the Fed will reduce interest rates by 25 basis points next month, with the remaining odds in the favor of another pause, according to the CME FedWatch tool.

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