Revving into higher gear for a third consecutive month, home builders ramped up the pace of housing starts to a seasonally adjusted annual rate of 1.87 million units in July, the Commerce Department reported. This is 1.5 percent above June’s upwardly revised 1.85 million-unit pace and is the strongest rate of housing production since April of 1986.
“It’s shaping up to be a very busy summer for home builders,” said Kent Conine, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Dallas. “Favorable interest rates, signs of an improving economy, healthy gains in home values and strong household formations are all fueling demand for new homes, and builders are responding to the times.”
NAHB Chief Economist David Seiders concurred. “Clearly, low mortgage rates continue to help energize the marketplace despite their recent upward movement, and builder confidence in the market for single-family homes hasn’t skipped a beat,” he said. “Housing was a strong growth engine for the economy in the first half of the year, and it now appears that housing will provide solid support to the GDP in the third quarter as well.”
July’s gain in housing starts was entirely on the single-family side, where a nearly 2 percent increase was recorded to a seasonally adjusted annual rate of 1.52 million units. “This is a 25-year high for our industry,” said Conine, noting that the latest construction pace is the strongest since the 1.53 million-unit rate reported in November of 1978.
Multifamily housing starts continued at a healthy pace in July, with virtually no change from the previous month at a seasonally adjusted annual rate of 351,000 units. This was 0.6 percent below June’s 353,000 units.
Construction of new homes and apartments rose in all but one region in July, with the Northeast posting the biggest gain, of 19 percent. The Midwest and South reported moderate gains of 5.7 percent and 5.6 percent, respectively, while the West posted a nearly 14 percent decline following a big run-up in the previous month.