Builders broke ground on fewer single-family houses in July, leaving home construction at depressed levels. The Commerce Department says builders began work on a seasonally adjusted 604,000 homes last month, a 1.5% decrease from June. That’s half the 1.2 million homes per year that economists say must be built to sustain a healthy housing market.
Single-family homes, which represent 70% of home construction, fell 5%. Apartment building rose more than 6%. Building permits, a gauge of future construction, declined 3.2%. Jill Brown, vice president of economics at Credit Suisse, says the collective decline suggests “very little forward momentum.”
The number of homes under construction is the fewest in 40 years. Just 413,000 homes are under construction, after accounting for seasonal factors. A decade ago, roughly 1.6 million homes were built. Though new homes represent 20% of the overall housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders.
