Compared with a year ago, July housing starts were up 10.1 percent, as the housing market recovers from the severe 2008-2009 recession.
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Groundbreaking increased 0.2 per cent to a seasonally-adjusted annual pace of 1.21 million units, the highest level since October 2007.
Regionally in July, combined single- and multifamily starts rose by 20.1 percent in the Midwest and 7.7 percent in the South. The Northeast and West posted respective losses of 27.5 percent and 3.1 percent. Permits for single-family homes, which account for nearly three-quarters of the housing market, slipped 1.9% to an annual rate of 679,000 last month.
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“It is in all likelihood going to take another leg up in new single-family home sales to sustain the pace of single family starts that was recorded in July”, said Joshua Shapiro, chief U.S. economist at the consultancy MFR.
Home builders are on a roll. Construction of single-family houses has risen 9.1 percent year to date, less than half the pace of sales growth for new homes.
The June spike was also due in part to a surge in activity in New York City right before tax incentives for multifamily developments were scheduled to expire.
Homebuyers and renters have crowded into the housing market this year, pushing up prices to levels that have worsened affordability.
Construction levels for new homes remain historically low, though there are continued signs of growing underlying demand.
Starts for the volatile multifamily segment fell 17 percent to a 424,000,000 unit rate. The National Association of Home Builders/Wells Fargo sentiment index rose to 61 from 60 the prior two months. The average 30-year, fixed-rate mortgage was 3.94 percent in the week ended August 13, below last year’s high of 4.53 percent reached in early January 2014, according to data from Freddie Mac in McLean, Virginia. Readings greater than 50 mean more respondents report good market conditions.
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Residential investment made a 0.2 percentage-point contribution to economic growth in the second quarter, when the economy grew at a 2.3 percent annualized rate.
