New home construction slipped back in July after previous surge

There was a decline in residential construction in July as the multifamily sector fell back from the previous month’s strong gain.

Dodge Data & Analytics latest report shows that residential building was down 6% month-over-month to $300.1 billion (annual rate) with the multifamily sector down 16% after climbing 28% in June. The multifamily sector was also down 15% from its average monthly rate during 2018.

Meanwhile, the single-family sector’s pace was down 2% following a 3% decline in June as affordability constraints resulting from high home prices continue to outweigh the benefits of low mortgage rates. It was 6% below the average monthly pace in 2018.

“The current year has already seen a pullback for multifamily housing after a robust 2018, and single-family housing has not yet provided evidence that it can move beyond its extended plateau any time soon,” said Robert A. Murray, chief economist for Dodge Data & Analytics.

Non-residential slips

The non-residential sector also posted a decline in July; slipping 4% to $293.4 billion (annual rate) after the 16% increase reported in June.

 “Recent support has come from those construction sectors that are partially influenced by public funding, namely institutional building with its June gain and now public works with its July gain,” said Murray. “This is typically what takes place during the latter stages of a construction expansion, which also helps to keep the initial stage of a broad-based slowdown to stay moderate.

Commercial buildings gained 4% while institutional buildings fell 17% after a 37% in June.

“The commercial building segment so far in 2019 has been mixed – office construction remains on track for a modest gain, but there’s also been generally depressed activity for store construction and some slippage for hotel and warehouse starts,” added Murray.