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Privately owned housing starts were at a seasonally adjusted annual rate of 1,446,000 in July, 9.6% below the revised June estimate of 1,599,000 and 8.1% below the July 2021 rate, according to the U.S. Census Bureau and the Department of Housing and Urban Development (HUD).

Single-family housing starts were at a rate of 916,000, 10.1% below the revised June figure of 1,019,000. The July rate for units in buildings with five units or more was 514,000.

“I think there’s no doubt that the housing market has receded,” Zonda chief economist Ali Wolf said on an appearance on CNBC’s “Squawk Box.” “When you have sales that are off 20%, what we know is that when sales go down, [housing] starts go down as well. We have seen that most of the metrics in the housing market show we probably are in a housing recession right now. But, we’ve had a really precipitous drop over the past couple of months, and there’s finally some signs that we’ve leveled off, though we’ve leveled off at lower levels.”

Wolf says that as interest rates have risen, monthly mortgage payments have increased nearly 40% year to date, and economic uncertainty abounds, it is “no surprise” that demand has receded in the housing market.

“Context is important. Where we are right now from a sales perspective, our data at Zonda shows we are back to 2018 and 2019 levels,” Wolf says. “That’s dramatically slower, but that also captures a healthy and more sustainable pace of home sales for the housing market.”

Privately owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,674,000, 1.3% below the revised June rate of 1,696,000 but 1.1% above the July 2021 rate. Single-family authorizations in July were at a rate of 928,000, 4.3% below the revised June levels. The July levels of authorizations of units with five units or more were at a rate of 693,000.

“We expect new-home construction will continue to decline through the rest of the year amid the higher mortgage rate environment and significantly lower home builder confidence. This week the National Association of Home Builders (NAHB) Housing Market Index fell below 50 for the first time since the early months of the pandemic,” says Doug Duncan, chief economist at Fannie Mae.

According to new residential construction statistics released by the Census and HUD, privately owned housing completions in July were at a seasonally adjusted annual rate of 1,424,000, 1.1% above the revised June estimate and 3.5% above the July 2021 rate. Single-family housing completions in July were at a rate of 1,009,000, 0.8% below the revised June rate. The July rate of completions in buildings with five units or more was 412,000.

“On a more positive note, single-family completions hit six consecutive months above a seasonally adjusted annual rate of 1,000,000 and are 7% above their July 2021 level,” Duncan says. “We believe this is evidence of a gradual easing to supply chain issues that have plagued home builders for months, an encouraging sign that more new homes will be ready for move-in in the coming months.”

Wolf says while the housing market has receded, impacts vary based on geographies. Certain markets in the Mountain West and West Coast, for example, have “slowed more notably” with homes sitting on the market without any interested buyers, according to Wolf.

“What we’re finding in the housing data is that there are so many people that still want to purchase a home, they weren’t able to over the past couple of years because the market was so feverish and so strong, but now they’re hitting this affordability wall,” Wolf says. “Unless [these prospective buyers] do see a price cut or unless they see some type of incentives from the builders to help sweeten the deal, they’re going to sit on the sidelines until it feels more stable or there’s a little bit more of a market correction.”