New Home Construction Falls to a Ten Year Low in July

New home starts fell to a ten year low in July, falling 6.1% MoM (consensus -4.5%). Over the past three months, housing starts have fallen 14.5% annualized, and over the past year they have fallen -21.5% YoY. Permits fell a more modest -2.8% MoM (-22.1% YoY), also more than expected and the lowest level since 1996.

Single family housing starts fell -7.3% MoM in July while multi-family fell a more modest -1.6% MoM. Single family home starts have fallen -26% YoY while multi family have only fallen -1.3% YoY. The decline in housing permits was just the opposite with single family homes declining -1.6% MoM (-24.3% YoY) and multi falling -6.1% MoM (-15.5% YoY). Homes under construction continue to decline, falling -1.6% MoM (-16.2% YoY).

Regionally, the South led the decline falling -11% MoM, followed by the West at -3.7% MoM, then the Northeast at -1.3% MoM. Only the Midwest saw a gain of +2.6% MoM. Over the past year, housing starts have risen +4.4% YoY in the Northeast, but have fallen -14.6% YoY in the Midwest, -19.2% YoY in the West, and -27.6% YoY in the South.

The tightening credit conditions are hitting builders both on their funding side as well as their customer demand. Most builders are clearly not inclined to begin new projects now as the National Association of Homebuilders Index fell to the lowest level since the early '90s in July.

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Initial jobless claims rose more than expected to 322k (consensus 315k). This is the third week in a row that claims have risen, and the four week moving average has moved back up to 312.5K.