WASHINGTON: U.S. homebuilding fell for a third straight month in July amid a steep decline in the construction of multi-family housing units, but a jump in permits to a seven-month high offered hope for the struggling housing market.
Economists polled by Reuters had forecast housing starts would edge up to a pace of 1.257 million units in July. The U.S. 2-year Treasury note yield rose above the 10-year note yield on Wednesday for the first time since June 2007, signaling a recession was looming. "The big decline in the University of Michigan consumer confidence index is the first indication that the U.S. consumer might not save the world economy after all," said Paul Ashworth, chief economist at Capital Economics in Toronto."Even though consumption has been unusually strong in recent months, there is no guarantee that trend will continue."
Building permits surged 8.4per cent, the largest gain since June 2017, to a rate of 1.336 million units in July. Last month's surge is a positive development for permits, which have been weak this year. Much of the decline in permits has been concentrated in the single-family housing segment. "A dearth of cheap lots and persistent labor shortages are constraining builders, especially for homes costing less than US$300,000, which have the greatest demand," said Robert Frick, corporate economist with Navy Federal Credit Union in Vienna, Virginia.