N
ew home construction showed a slight rebound in July, but the industry still faces significant challenges. Housing starts rose 5.2% from June to a seasonally adjusted annual rate of 1.43 million units, driven largely by multifamily construction. Single-family starts increased by just 2.8%. Building permits for single-family homes were up 0.5% month-over-month, while completions rose 11.6%.

    Despite these small gains, the industry remains subdued due to factors such as housing affordability issues and supply-side headwinds like labor shortages and elevated construction costs. NAHB's Housing Market Index fell to 32 in August, its lowest level this year, reflecting builders' pessimism about the market.

    To close deals, more builders are offering sales incentives: 66% of respondents used them in August, up from 62% in July and a pandemic-era high. However, addressing the chronic housing deficit remains challenging, especially during economic uncertainty. There are currently 621,000 single-family homes under construction, down 3.7% year-over-year.

    Regional construction levels align with supply and demand trends: starts rose 17.7% in the Midwest and 10.2% in the Northeast, areas where demand is stronger. In contrast, construction has slowed in regions with growing inventory, such as the South (down 2.4%) and West (down 0.5%).