U.S. Housing Starts Rebound in July, But Declining Permits Signal Caution Ahead — Evening Brief – 08.19.25
U.S. housing starts posted a stronger-than-expected rebound in July, rising 5.2% month-over-month to a seasonally adjusted annual rate of 1.428 million, according to the Census Bureau. The figure, which surpassed consensus expectations of 1.290 million, marked an improvement from June’s upwardly revised 1.358 million. The bulk of the increase was driven by multi-family construction, which rose 11.6% following an even larger 34.5% jump in June. Single-family starts also moved higher, climbing 2.8% to 939,000, extending modest gains from the prior month.
Despite the improvement in starts, forward-looking indicators suggest underlying weakness in the housing market. Building permits fell 2.8% in July to an annualized 1.354 million, missing expectations and registering their fourth consecutive monthly decline. Permits are now at their lowest level since the early months of the COVID-19 pandemic. The downturn was led by multi-family permits, which dropped 9.9%, signaling that the surge in new rental construction may not be sustained. Single-family permits were comparatively more stable but remain subdued as elevated mortgage rates and affordability challenges limit demand.
Completions provided some near-term relief, rising 6.0% in July to an annual rate of 1.415 million. Single-family completions jumped 11.6% to 1.022 million, helping to ease supply constraints in parts of the market. Even so, completions remain 13.5% below year-ago levels, reflecting lingering bottlenecks in construction pipelines.
The July data highlights the tension in the housing sector between near-term resilience and long-term headwinds. Developers continue to break ground on projects, particularly in the multi-family segment, but the persistent decline in permits underscores growing caution as borrowing costs remain high and consumer affordability remains stretched. While buyers may see incremental supply relief from higher completions, the broader outlook points to a slowdown in future activity as developers retrench.