Home construction indicators remain weak in July
Lake States saw a drop in new building permits issued
MADISON, Wis. – Some home construction indicators continued to flash a yellow warning light in July as the rise in new housing permits issued flattened nationwide, and issuance was somewhat less robust in the Lake States than nationally.
Mortgage rates stopped increasing in July after a non-stop rise from the previous year. Rates dipped from 5.70% in June to 5.54% in July, offering hope that rates would stabilize after doubling from one year prior.
Housing permits issued are a leading indicator for construction activity and demand for forest products, particularly framing lumber.
New building permits issued in the Lake States have fallen by more than 10% in both Wisconsin and Michigan and by about 1% in Minnesota from last year through May. However, May permits issued in Wisconsin and Michigan actually increased from April.
Single family housing starts fell 8.1% in June, but this drop was partially offset by new construction of multi-family units. Plans for new residential projects were encouraged by continued very strong rent growth across the country, with record rent growth in the 50 largest U.S. markets for the 16th straight month.
One big obstacle to new single-family home purchases has been rapidly rising mortgage rates in late 2021 and 2022, with interest rates doubling from August of 2021. But the slight rate drop in July provided a glimmer of hope as benchmark thirty-year mortgage rates actually dropped for the first time in a year after successive months of rapid increases.