Production and permitting of new single-family homes continued on an upward trajectory in July, according to the U.S. Commerce Department. Meanwhile, substantial declines on the multi-family side dragged down the overall numbers, with combined single- and multi-family starts down 1 percent to a seasonally adjusted annual rate of 581,000 units and combined single- and multi-family permits down 1.8 percent to a 560,000-unit rate.
Single-family housing starts posted a 1.7 percent gain to a seasonally adjusted annual rate of 490,000 units in July, while single-family permits registered a 5.8 percent gain to 458,000 units. Both of these were the highest levels registered since October of 2008. Meanwhile, multi-family starts tied a record low set in April of this year, falling 13.3 percent to a 91,000-unit rate. Multi-family permits fell 25.5 percent to 102,000 units.
Due largely to declining multi-family production numbers, housing starts fell in three out of four regions in July. The Northeast posted a 16.3 percent decline, while the South and West posted more moderate declines of 1.4 percent and 1.6 percent, respectively. The Midwest was the only region to report a gain, of nearly 13 percent. Meanwhile, housing permits fell 5.2 percent in the Northeast and 9.2 percent in the South, but gained 14.1 percent in the Midwest and 7 percent in the West in July.
“With the impending expiration of the first-time home buyer tax credit at the end of November, July was probably the last month in which to get homes permitted and started in time for customers to take advantage of that valuable incentive,” said Joe Robson, chairman of the National Association of Home Builders (NAHB), and a home builder from Tulsa, Okla. “Builders were responding to improved demand related to that upcoming deadline and also to the first signs of an economic recovery. However, it remains to be seen what happens after the tax credit expires, and the severe credit crunch that has curtailed many multi-family projects is looming over single-family builders as well. Congress needs to take action to maintain the momentum toward a housing and economic recovery.”
The latest report marks a fifth consecutive month of improvement in single-family housing starts and a fourth consecutive month of improvement in single-family permits,” said NAHB Chief Economist David Crowe. “This is exactly in keeping with our latest member surveys, which indicate that builders are cautiously optimistic about single-family sales conditions over the next several months. That said, the drop-off in multi-family construction and permitting shown in recent months’ reports may be a harbinger of the financing challenges facing all home builders going forward. A severe lack of credit for acquisition, development and construction financing, along with low appraisals and the upcoming expiration of the first-time buyer tax credit, could derail the progress made so far.”