Housing starts and permits for new construction fell, not unexpectedly, in July, while consumer prices were almost unchanged for the month.

The U.S. Commerce Department reported on Friday that housing starts fell 2.7% to a seasonally adjusted annual rate of 1.65 million units in July. That follows a revised 2.7% decline in June. July's rate was the slowest since April. Housing permits, a barometer of future homebuilding activity, posted a slight drop of 0.5% for the month.
Both declines followed stronger than normal spring and summer numbers and did not surprise analysts.
The recent surge in permits as well as the recent pickup in mortgage applications will keep housing starts at the July level or higher for a few more months, says Newport Communications Senior Economist Jim Haughey.
“Homebuilders will absorb the freight and vocational truck capacity freed up by the steep drop in non-residential construction activity," he says.
But Haughey noted this should provide an indirect boost to truck freight volume.
“Mortgage refinancing is pumping $50 billion a year into homeowner bank accounts to finance the continued gains in consumer spending in spite of a weak labor market,” he said.
Meantime a separate report from the Labor Department indicates consumer prices nudged up 0.1% in July.
The increase in the Consumer Price Index follows the same increase in June and should ease any fears that the Federal Reserve could be poised to raise interest rates due to inflationary concerns.