July Housing Data Shows Strength

By at 19 August, 2020, 10:43 pm

by Raymond J. Keating-

We all could use some good news during this pandemic and tough economy. Well, check out the new housing data. The latest report from the U.S. Census Bureau points to strength in the housing building sector.

Specifically, both housing starts and permits grew robustly in July, expanded for the third straight month, and on a seasonally adjusted annual rate, have essentially recovered the ground lost during the declines in March and April.

On housing starts, Census reported that “privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,496,000,” which was up by 22.6 percent versus June, and up by 23.4 percent compared to a year earlier. Also, the July level is within the range registered during the second half of 2019 and into very early 2020.

Source: Federal Reserve Bank of St. Louis, FRED

Meanwhile, regarding housing permits, a measure for future starts and construction, Census noted that privately-owned housing units authorized by building permits in July registered 1,495,000, at a seasonally adjusted annual rate. That was 18.8 percent above the June level, and 9.4 percent above the July 2019 level. In addition, the July permits level came in above the February pre-pandemic level.

Source: Federal Reserve Bank of St. Louis, FRED

By the way, both housing starts and permits in July beat general market and economist expectations and forecasts.

Housing is a fascinating sector of our economy. First, it is a significant size, and has a clear impact on the overall economy. Second, it’s also a signal of economic confidence, with the July housing data pointing to some confidence among Americans that our current economic woes are temporary. And third, while all sectors of the U.S. economy are largely populated by small businesses, that is especially the case with housing. For example, in the residential building construction industry, 99.7 percent of employer firms have fewer than 100 workers, and 92.6 percent fewer than 10 employees.

Strength in housing is welcome news for the economy, for what it might be telling us about Americans’ confidence and expectations, and for small business.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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