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Earlier this week, the construction industry received bad news when it was reported that total starts dropped by 7% in July due to a pull back in the non-building segment. But when it comes to the residential sector, it’s a completely different story. Instead, ABC News reports that construction of new homes grew 22.6% last month after a slowdown due to the COVID-19 pandemic.
Citing the Commerce Department, the network added that new homes were started at an annual pace of almost 1.5 million in July, which was the highest since February. This marked the third month in a row that housing starts had risen after the downturn in March and April. “U.S. housing starts blew the roof off of expectations in July … these are the kind of gains seen after storms/hurricanes,” BMO Capital Markets Senior Economist Jennifer Lee said in a research note.
ABC News reports that large gains came from the construction of apartments and condominiums, which grew by 56.7% while single-family homes grew by 8.2%. The applications for building permits also grew 18.8% from June to an annual rate of 1.5 million, which was the highest since January.
“Strong demand and a record level of homebuilder confidence will support housing starts in the second half of 2020,” Oxford Economics Economists Nancy Vanden Houten and Gregory Daco wrote, but noted that Congress’ failure to approve a second rescue package could hurt the economy. “The still-widespread coronavirus and an economy struggling to recover without fiscal support may limit the upside.”
