Housing starts fall, but building permits rise
The increase in permits to their highest level since August 2008 is a good sign. The fall in housing starts is a reminder that the recovery will be uneven.
The number of new homes on which builders started construction declined slightly from June to July, but the number of building permits issued rose to the highest level since August 2008.
According to statistics from the Commerce Department and the Department of Housing and Urban Development, builders started construction on 1.1% fewer homes in July than in June, but the number was 21.5% above the July 2011 rate. Those numbers include both single-family and multifamily projects.
Builders started construction on 6.5% fewer single-family homes in July than in June.
“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,” Barry Rutenberg, chairman of the National Association of Home Builders and a homebuilder from Gainesville, Fla., said in a news release.
The number of building permits granted was up 6.8% from June and 29.5% from July 2011. Builders got 4.5% more single-family permits in July than in June.
"The housing market is getting better, but it is taking a long time," Patrick Newport, an economist at IHS Global Insight, told The Associated Press. He predicts that builders will start construction on 25% more homes than they did last year.
The numbers were in line with the modest housing recovery that seems to be under way in many cities. This particular set of statistics has a high margin of error, and the numbers are often revised as more data arrive.
Builders' faith in the market reached a five-year high last month, another indication that the outlook for construction of new homes, both single-family and multifamily, is on the upswing.
"The likelihood is that housing starts will rise strongly next month," Paul Diggle, property economist for Capital Economics, told The Wall Street Journal. " All in all, despite the slight fall, this latest set of results does little to dissuade us that the underlying trend in housing starts is upwards. Indeed, based on the strength of the leading indicators, the recovery in homebuilding could soon accelerate."
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.