US housing market data released Tuesday showed a sharp decline in the pace of home construction starts in July, with the number of homes started falling to 1.239 million units on a seasonally adjusted annual basis, compared to 1.415 million units in June, falling short of market expectations of 1.340 million units.
On a monthly basis, home construction starts fell 12.4% in July, after a 19.7% jump in the previous month, indicating a significant loss of the momentum seen in residential construction activity during June.
In contrast, building permits showed a marked improvement, rising to 1.443 million in July, compared to 1.374 million in June, exceeding analysts' expectations of 1.370 million.
Building permits rose 5% month-on-month in July, after falling 2.6% the previous month, providing a more positive sign for future building plans, despite a sharp decline in actual construction starts.
The data as a whole points to a clear divergence in the performance of the US housing market; while actual construction activity came under strong pressure during July, building permits showed improvement, which may reflect developers continuing their plans to launch new projects despite the challenges facing the sector.
This discrepancy comes at a time when markets are monitoring the performance of the housing sector as an important indicator of the strength of the US economy, especially with the continued impact of borrowing costs and interest rates on home buying and real estate investment decisions.
