Housing Starts Rise 1.7 Percent in July

August 20th, 2010 by Editor

Nationwide housing starts inched up 1.7 percent to a seasonally adjusted annual rate of 546,000 units in July from a downwardly revised figure in the previous month, according to the latest report from the U.S. Commerce Department. The gain occurred entirely on the multifamily side, with single-family housing production falling 4.2 percent to 432,000 units.

The entire 1.7 percent gain in housing production this July was due to a 32.6 percent jump on the more volatile multifamily side, which brought that sector back closer to trend at a 114,000-unit rate following a major dip in the previous month, according to the National Association of Home Builders (NAHB). Meanwhile, single-family housing production declined 4.2 percent to a seasonally adjusted annual rate of 432,000 units, its lowest mark since May of 2009.

Two regions registered improved starts activity in July, with the Northeast and Midwest each posting double-digit gains, of 30.5 percent and 10.7 percent, respectively. The South, which is the country’s largest housing market, posted a 6.3 percent decline in starts this July, while the West posted no change in starts activity.

Meanwhile, builder confidence in the market for newly built, single-family homes edged down for a third consecutive month in August, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), also released this week. The HMI declined one point to 13, its lowest level since March of 2009.

“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” says NAHB chair Bob Jones, a home builder from Bloomfield Hills, Mich. “Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer lending conditions are causing them to lose potential sales.”

Two out of three of the HMI’s component indexes fell in August. The component gauging current sales conditions declined one point to 14, while the component gauging sales expectations for the next six months declined three points to 18. The component gauging traffic of prospective buyers held unchanged at 10.

Meanwhile, three out of four regions posted HMI declines in August. A six-point decline to 18 in the Northeast partially offset a big gain in that region in the previous month, while the South and West each posted one-point declines to 13 and 8, respectively. The HMI for the Midwest held even at 15 in August.

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