Housing starts jumped in July compared to June to reach the highest level in eight months, as home builder confidence improved, the U.S. Census Bureau reports.
The seasonally adjusted annual rate of about 1.1 million units is 15.7% above the revised June estimate of 945,000 units and 21.7% above the July 2013 rate of 898,000 units.
Single-family housing starts in July were at an annual rate of 656,000 units – 8.3% above the revised June figure of 606,000 units. The annual rate for units in buildings with five units or more was about 423,000.
It would appear that the increase in new construction will continue into August: According to the report, privately owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1.05 million, which is 8.1% above the revised June rate of 973,000 and 7.7% above the July 2013 estimate of 977,000.
Permits for single-family homes in July were at an annual rate of 640,000 – a 0.9% increase above the revised June figure of 634,000 units. Permits for units in buildings with five units or more were at a rate of 382,000.
In July, housing completions were at a seasonally adjusted annual rate of 841,000 – an increase of 3.7% above the revised June estimate of 811,000 and 8% above the July 2013 rate of 779,000. Completions of single-family homes were at an annual rate of 635,000 – 6.2% above the revised June rate of 598,000. The annual rate for completion of units in buildings with five units or more was 199,000.
A drop in the unemployment rate, low mortgage interest rates and increased demand for new homes from prospective buyers combined in July to help boost home builder confidence. But high home prices, slow wage growth and tighter credit continue to hamper the housing recovery.
Despite the increase in housing starts, demand is outpacing construction. Typically, construction starts run at a rate of 1.6 million to 1.9 million new units per year just to accommodate population growth and household formation, according to the Harvard Joint Center for Housing.
Looking at the trend on a regional basis, combined single- and multifamily housing starts rose 44% in the Northeast, 29% in the South and 18.6% in the West, while production fell by 24.8% in the Midwest from an unusually high June level.
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