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The housing market appeared to take one step forward and two steps back in the latest data released by the U.S. Census Bureau and the Department of Housing and Urban Development. However, construction trade groups insist that the near-future will be vibrant.
First, the good news: Single-family housing starts in July were at a rate of 770,000, which is 0.5 percent above the revised June figure of 766,000. Privately-owned housing starts in July were at a seasonally adjusted annual rate of 1,211,000, which is 2.1 percent above the revised June estimate of 1,186,000 and is 5.6 percent above the July 2015 rate of 1,147,000.
Now, the bad news: Single-family authorizations in July were at a rate of 711,000, which is 3.7 percent below the revised June figure of 738,000, and privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,152,000, which is 0.1 percent below the revised June rate of 1,153,000—although it is 0.9 percent above the July 2015 estimate of 1,142,000. And single-family housing completions in July were at a rate of 743,000, which is 0.4 percent below the revised June rate of 746,000, while privately-owned housing completions in July were at a seasonally adjusted annual rate of 1,026,000, which is 8.3 percent below the revised June estimate of 1,119,000 but is 3.2 percent above the July 2015 rate of 994,000.
Despite the dismal data on housing authorizations and completions, a trio of trade groups involved in the design and construction of residential and non-residential buildings expressed optimism for the 2017 market during a joint economic forecast.
“Our forecast shows single-family production expanding by more than 10 percent in 2016, and the robust multifamily sector leveling off,” said Robert Dietz, chief economist with the National Association of Home Builders (NAHB). “Historically low mortgage interest rates and favorable demographics should keep the housing market moving forward at a gradual pace, but residential construction growth will be constrained by shortages of labor and lots and rising regulatory costs.”
“Revenue at architecture firms continues to grow, so prospects for the construction industry remain solid over the next 12 to 18 months,” said American Institute of Architects Chief Economist Kermit Baker. “Given current demographic trends, the single-family residential and the institutional building sectors have the greatest potential for further expansion at present.”
“Non-residential construction spending growth will continue into the next year with an estimated increase in the range of 3 to 4 percent,” said American Builders and Contractors’ Chief Economist Anirban Basu. “Growth will continue to be led by privately financed projects, with commercial construction continuing to lead the way. Energy-related construction will become less of a drag in 2017, while public spending will continue to be lackluster.”