Nationwide housing starts rose 5.9 percent to a seasonally adjusted annual rate of 896,000 units in July as multifamily construction rebounded from a dip in the previous month, according to newly released figures from HUD and the U.S. Census Bureau. Meanwhile, single-family construction recorded a modest decline from a rate that was upwardly revised for the previous month.
"Builders are making every effort to keep up with the rising demand for new homes and apartments, and construction in both sectors is running well ahead of the pace we saw at this time last year," noted Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. "However, ongoing issues with accessing credit and limited supplies of finished lots and labor are making it tough to do that, particularly for single-family builders."
Single-family housing starts declined 2.2 percent from an upwardly revised pace in June to a seasonally adjusted annual rate of 591,000 units in July. Meanwhile, a 26 percent gain to a 305,000-unit pace on the multifamily side offset a similar dip in the previous month.
"Today's report is in line with our forecast for continued, gradual strengthening of housing starts and permit activity through the rest of the year," said NAHB Chief Economist David Crowe. "The double-digit bounce-back on the multifamily side was in keeping with typical month-to-month volatility in that sector," he noted, "while the sideways movement in single-family was a result of unusually wet weather in the South and West."
Regionally, combined housing starts activity posted solid gains of 40.2 percent in the Northeast, 25.4 percent in the Midwest and 7.2 percent in the West, respectively, in July, while the South posted a seven percent decline.
Issuance of building permits, which can be an indicator of future building activity, rose 2.7 percent to a seasonally adjusted annual rate of 943,000 units in July. Single-family permits dipped 1.9 percent to 613,000 units from a strong pace in the previous month, while multifamily permits gained 12.6 percent to 330,000 units.
Regionally, combined permit issuance increased across the board in July, with gains of one percent, 2.8 percent, 1.1 percent and 7.1 percent in the Northeast, Midwest, South and West, respectively.
"The housing market, which has been in dire need of a boost in inventory, is seeing more positive data in both housing starts and home permits," said Quicken Loans Chief Economist Bob Walters. "The increase of new homes being built will reduce the strain on homebuyers with few options and who are battling against not only other families, but cash investors as well.”