Home construction slides but building permits hit 4-year high
U.S. home builders scaled back new construction in July from a four-year high reached the previous month, but applications for building permits jumped to their highest level since August 2008.
Housing starts for single-family homes and apartments slid 1.1% last month from June, to a seasonally adjusted annual rate of 746,000. June’s construction pace had been the fastest since October 2008.
Only the Midwest enjoyed an increase, with housing starts picking up 17%. Every other region fell, with new building efforts in the West declining 5.3%.
But compared with the same month a year earlier, July’s national rate was up 21.5%, according to U.S. Commerce Department figures.
Multi-family-unit starts kept July’s rate from tumbling further, rising 12.4% from June, to an annual rate of 244,000. But new construction for single-family properties showed its first fall since February, plunging 6.5% to an annual rate of 502,000.
Overall housing starts are lagging far behind the pre-bubble annual rate considered to be healthy -- 1.5 million units.
But the market may be looking up. Permits to start construction bumped up 6.8% from June, to an annual rate of 812,000, with applications for single-family units getting a 4.5% boost. Compared with July 2011, overall permits saw a 29.5% rise.
Permit requests jumped in every region except the Midwest. In the West, applications soared 14% from June and a whopping 54% from a year earlier.
Local construction activity is strongest in metropolitan areas with faster job growth and lower vacancy rates, according to Jed Kolko, chief economist at real estate website Trulia. But permit applications for the first half of the year came in at less than a quarter of the normal levels in inland California areas such as Sacramento and the Riverside-San Bernardino region.
However, according to Kolko, the overall Commerce Department report was “strong” and “confirms that recent previous increases are part of a sustained trend, not a temporary blip.”
Earlier this week, a series of housing reports showed signs for optimism.
The median home price in California jumped close to a four-year high last month, increasing 2.6% year-over-year to $281,000. Though sales dipped 3.7% from June, they were up 13.9% from July 2011.
Home builders are also apparently feeling more confident, with a monthly builder-sentiment index reaching its highest level in five years.
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