In July, U.S. housing starts surprisingly increased as building activity broadly increased, endorsing the view that investment in residential construction will bounce after falling in the second quarter. Since February, Groundbreaking saw it’s highest levels by gaining 2.1% to a seasonally adjusted yearly pace of 1.2 million units according to the Commerce Department’s report on Tuesday. June’s starts were broadly unchanged at a 1.19 million-unit rate.
Permits for future construction dipped 0.1 percent to a 1.15 million-unit rate last month. Economists polled by Reuters had forecast housing starts slipping to a 1.18 million-unit pace last month and building permits rising to a 1.16 million-unit rate. Also, investment in residential construction reduced in the second quarter for the first time more than two years.
That, combined with a clear decrease in inventory investment, a continued downturn in business spending and feeble government outlays, held GDP to a 1.2 percent annualized growth rate during the quarter. Versus the backdrop of a tightening labor market, which is steadily increasing wages, economists anticipate a rebound in residential construction spending in the third quarter. But with housing starts still running ahead of permits, the expected rally
Against the backdrop of a tightening labor market, which is steadily driving up wages, economists expect a rebound in residential construction spending in the third quarter. But with housing starts still running ahead of permits, the projected rally could potentially be modest. On Monday, a survey that homebuilders published displayed confidence increasing in August, with builders confident about sales now and over the next six months. Though, their views about prospective buyer traffic eased modestly.
In July, groundbreaking on single-family homes, the biggest part of the market, increased 0.5% to a 770,000-unit pace, also the highest level since February. Single-family starts gained in the West and South, but fell 23.9% in the Northeast and dropped 2.6% in the Midwest. Housing starts for the volatile multi-family segment gained 5% to a 441,000-unit pace. Groundbreaking on multi-family housing projects with five units or more increased to the highest level since September of last year. The multi-family segment of the market continues to be endorsed by strong demand for rental accommodation as some Americans exclude homeownership in the aftermath of the housing market collapse.