Nationwide housing production edged down 1.1 percent to a seasonally adjusted annual rate of 746,000 units in July, according to newly released figures from the U.S. Department of Housing & Urban Development (HUD) and the U.S. Census Bureau. However, builders pulled more permits for planned new-home projects than they have in any month since August of 2008.
"While many builders believe that the outlook for housing is considerably brighter than it has been in years, we are being very careful about keeping inventories tight and not building ahead of demand," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. "At the same time, builders are drawing more permits for new construction so we can accommodate buyers and renters as they return to the marketplace."
After four consecutive months of gains, single-family housing starts fell back 6.5 percent to a seasonally adjusted annual rate of 502,000 units in July. Meanwhile, multifamily starts posted a 12.4 percent gain to 244,000 units, their strongest pace since February. On a regional basis, combined single- and multifamily starts declined 1.3 percent in the Northeast, 3.5 percent in the South and 5.3 percent in the West, but rose 17 percent in the Midwest in July.
"Our latest surveys confirm builders' increased confidence about future home buyer demand, and that's reflected in today's permit numbers," said NAHB Chief Economist David Crowe. "Increasingly, housing is re-emerging as a traditional and much-needed source of strength in local economies as builders are able to put more of their crews back to work. But two things that are slowing this process considerably are the challenges that builders continue to face in accessing credit for viable new projects and the difficulty of obtaining accurate appraisals on new homes."
Issuance of new building permits, which can be an indicator of future building activity, rose 6.8 percent to a seasonally adjusted annual rate of 812,000 units in July—the fastest pace in nearly four years. Single-family permits rose 4.5 percent to 513,000 units (their best pace since March of 2010) while multifamily permits rose 11.2 percent to 299,000 units. Permit issuance rose in three out of four regions in July, with the Northeast registering a 12.2 percent gain, the South a 5.8 percent gain and the West a 14 percent gain. The Midwest posted a 4.2 percent decline.
