New residential construction in the U.S. is stronger than the recent headline data might imply, noted Wells Fargo in a research report. In the month of July, total housing starts had fallen 4 percent, which marked the third straight monthly fall. That noted, most of the recent softness is mainly due to falls in multifamily construction.
While still relatively elevated, the multifamily segment seems to have topped out. Several major apartment markets in the Northeast and West are greatly exposed to the decelerating global growth and are likely feeling the reverberations from diminishing international investment.
Still, activity is expected to stay sturdy as multifamily building permits rose 21.8 percent in July. Meanwhile, single-family construction seems to have the wind at its back, owing to an overall rebound in purchasing conditions. Single-family starts had risen strongly in June and July.
“Given that permits have risen for three straight months, we expect single-family activity to continue to climb”, added Wells Fargo.
