"The market for new construction is back on track."
That’s the analysis from Patrick Newport, U.S. economist at IHS Global Insight, in response to the latest report on new-housing starts and permits from the U.S. Department of Commerce, released today.
Permits were up 6.8% in July, hitting an annual rate of 812,000, the best reading the industry has seen since August 2008. Single-family permits were up 4.5% for an annual rate of 513,000, and multifamily permits sprang up 11.2% for an annual rate of 299,000.
Housing starts moved down 1.1% in July, hitting an annual rate of 746,000, due to a 6.5% decline in single-family activity. Multifamily starts were up 12.4% for the month. However, "since housing starts tend to follow housing permits with a small lag, July’s decline in starts is nothing to worry about," Newport said.
"The recovery is mainly taking place in the South and West, with the multifamily segment coming back faster than the single-family segment," he said, but added that the pickup has thus far been sluggish and is expected to remain so for about another year. "Eventually, provided the economic recovery remains on track, the demographics will start to kick in—household formation will accelerate … and many young adults now living with parents will start moving out." As for when the industry can expect starts to top the 1.5 million mark, Newport’s prediction is 2015.
See the Commerce Department’s full release on July’s housing starts and permits numbers.
Claire Easley is a senior editor at Builder.