Interest Rate Roundup

Tuesday, July 19, 2011

Housing starts pop in June

We just got the latest figures on home construction and they were strong. Housing starts popped 14.6% in June to a seasonally adjusted annual rate of 629,000 from 549,000 in May. That was well above the 2.7% increase that economists were forecasting, and it leaves starts at their highest level since January.

Building permits rose by a more modest 2.5% to a SAAR of 624,000, but that did top expectations for a decline of 2.3%. By property type, single family starts rose 9.4% while multifamily starts jumped 30.4%. Permits gained 0.2% in the single family market and 20.8% in the multifamily arena.

It looks like spring did come to the housing market ... just a little late! Construction activity ramped up in June to a multi-month high, while single-family permitting rose for the fourth straight month. Inventories of new homes are extremely lean and interest rates remain low, two factors that likely encouraged builders to pick up the pace a little.

The key question is whether this is the start of a new trend, or if we're just being set up for disappointment again. Starts and permits picked up in late 2010 and early 2011, for instance, only to fizzle out.

Personally, I'm not terribly optimistic. We're still dealing with a massive overhang of foreclosed and distressed "used" housing inventory. The economy appears to be weakening again. And the labor market is dead in the water. People who don't have jobs don't buy houses. It's as simple as that. So construction won't pick up on a consistent basis until we start creating jobs in this country.


Post a Comment

<< Home

Site Meter