Housing starts rose 1.7% in July to a seasonally adjusted annual rate of 546,000, the Commerce Department reported Tuesday. The gain, however, was due to a 17.3% jump in multi-family construction, much of it in the Northeast.
The rate missed the consensus analyst estimate of 560,000. Starts were still 7% below July, 2009.
Single-family housing starts were down 4.2% to a pace of 432,000, 13.6% below the rate last July.
Regionally, starts were up 30.5% in the Northeast for all housing types and up 6.3% for single-family; up 10.7% overall and up 8.8% for single-family in the Midwest; down 6.3% and down 5.8%, respectively, in the South; and flat and down 14.7% in the West. Year over year, the Northeast was up 26.2% overall but down 3.8% for single-family; the Midwest was down 15.5% and down 14.9%, respectively; the South was down 7.9% and down 9.6%; and the West was down 13.5% and down 26.4%. The larger declines in the South and West were seen as negatives for the public builders by analysts.
Permits were down almost across the board, declining 3.1% for all housing types to an annual rate of 565,000, 3.7% below last July. Single-family permits were down 1.2% to a rate of 416,000 and were 13.2% behind July, 2009.
Regionally, permits in the Northeast were down 25.9% overall and down 8.2% for single-family; the Midwest was down 1.1% overall and down 8.1% for single-family; the South was up 3.9% overall but flat for single family; and the West was down 4.9% overall but up 6.0% for single-family. Year over year, the Northeast was up 1.6% overall but down 4.3% for single-family; the Midwest was down 15.6% and down 17.1%, respectively; the South was up 2.1% but down 14.3% for single-family; and the West was down 9.4% and down 11.1%.
Michael Rehaut, home building analyst at J.P. Morgan, put out an alert to clients pointing out that the annual rate of 560,000 missed the street estimate in part due to a downward revision June starts from 549,000 to 537,000. The percentage gain of 1.7% came in close to the 2% gain that was expected.
"Overall, we believe these results should not represent a material disappointment, given the stocks' relatively neutral reaction to the August NAHB Survey¹s 13 reading vs. the Street consensus of 15 and last month¹s 14; in other words, we believe the group already reflects a highly negative sentiment," he wrote.
Similarly, Stephen East at Ticonderoga Securities said the report "came in below consensus but ahead of our skimpy expectations." He thus viewed it as "encouraging."