Announced this morning, Housing Starts were 1,239,000 in July, less than expected and a -12.4% decrease from the previous month’s revised figure. This follows a 19.7% increase in the previous month. In addition, Building Permits were 1,443,000 in July, more than expected, and a 5.0% increase from the previous month.
Overall, the housing market remains under pressure with a decrease in housing starts in July, coupled with an increase in building permits. This dynamic fits with Home Depot’s quarterly results this morning noting that demand in the second quarter was driven by customers engaging in smaller projects. Both housing starts and building permits have been range bound since 2022, as long-term interest rates have generally ascended over that time. Even though housing is only 4% of GDP, its activities are linked to other areas of the economy as individuals employed in construction, manufacturing, and related industries tend to spend money in other economic sectors.
While the construction industry showed job increases in July, one of the few bright spots in an otherwise weak payrolls report last week, the housing market remains challenged. Meanwhile, wage increases are just keeping up with inflation and not giving consumers additional purchasing power as evidenced in last week’s weak retail sales report. Given its influence in other areas of the economy, the Federal Reserve will need to keep a close eye on the housing market in the months ahead as they contemplate their policy.
In all, the 10-year US Treasury yield ticks slightly higher following the report, and equity futures are lower as we head into the market open.
This material is intended to be for informational purposes only and is intended for current or prospective clients of Argent Trust Company. This information is obtained from sources believed to be reliable, and its accuracy and completeness are not guaranteed. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice, and does not take into account all the circumstances of each investor. Forward-looking assumptions are Argent Trust Company’s current estimates or expectations of future events or future results based on proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information. Investments can go down as well as up. Past performance is not a reliable indicator of future results.
