Housing Starts, Permits Both Drop in July

Housing starts in July fell from Junernfigures but still came in well ahead of predictions.  According to information released by the U.S.rnCensus Bureau and the Department of Housing and Urban Development on Tuesday, Julyrnhousing starts were at a seasonally adjusted annual rate of 604,000, a drop of 1.5rnpercent from the revised June estimate of 613,000.  The June numbers were also revised downward fromrnthe original estimate of 629,000 starts.  Reuters had predicted that starts would droprnto 600,000 while IFR Markets was expecting 590,000 starts.  </p

Multi-family starts offset what was arnlarger drop in the single family market. The latter decreased 4.9 percent torn425,000 from the revised June figure of 447,000 while construction was begun inrnbuildings with five or more units at the rate of 170,000, up from 160,000 inrnJune.  </p

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Housing permits fell from the June estimatesrnand failed to meet economist predictions, decreasing from an annual rate ofrn617,000 in June to 597,000 in July.  Thisrnwas a -3.2 change, but still an improvement of 3.8 percent from the 575,000rnpermit rate in July 2010.  Economistsrnfrom Reuters had predicted that permits in July would be at a rate ofrn605,000 and 600,000 respectively.  Singlernfamily permits increased from 402,000 to 404,000 month over month whilernmulti-family permits fell from 194,000 to 171,000, a drop of 11.9 percent.</p

The backlog of permits, that is permitsrnthat have been issued but construction not yet started, diminished from June tornJuly.  The inventory of unused permitsrndropped from 85.1 thousand to 80.9 thousand, a decrease of 4.9 percent.  </p

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There were 413,000 housing units underrnconstruction at the end of July, down 3,000 from June.  A total of 243,000 of these units were singlernfamily homes.</p

In a commentaryrnon the expected housing numbers, Reuters Economists said, Housingrnstarts and building permits will likely consolidate their gains from recentrnmonths, with readings of 590k and 600k, respectively, for July. That would berndown from the 629k and 617k seen in June, but still a bit stronger than recentrntrends in both series. The underlying trend in multi-unit structures remains strongrnthough will likely come down a bit after surging in both series. Starts shouldrnsee a small retreat in single-unit structures after June’s 39k jump to 453k.</p

“The pace of new home sales remains much too low to support significantrnincreases in single-unit construction. The inventory of new homes was downrnalmost a quarter in June from a year earlier, however, which provides a glimmerrnof hope. While the much larger supply of existing homes seems stagnant and drivesrnthe overall housing market, new and existing homes aren’t completely perfectrnsubstitutes, so dwindling new home inventory is a slightly positive sign.”

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