July Housing Starts Continue Torrid Pace

Housing starts continued at very healthy levels in July, increasing to a seasonably adjusted annual rate of 1.978 million units, the U.S. Commerce Department reported. The pace was 8.3 percent above June’s upwardly revised rate of 1.826 million and 4.5 percent above the July 2003 pace.

“Builders remain confident about the market and expect to maintain a healthy pace through the coming months as we strive to keep up with strong demand for single-family homes and condominiums” said Bobby Rayburn, president of the National Association of Home Builders (NAHB) and a home and apartment builder from Jackson, Miss.

“Favorable market conditions continue to bode well for housing. Mortgage rates remain extremely attractive on a historical basis and with house price performance remaining solid and continued increases in household formations, we expect housing to remain strong,” said NAHB economist Michael Carliner.

For the month, single-family housing starts increased 8.5 percent to a pace of 1.651 million. This was a 7.5 percent increase over the July 2003 pace.

Multifamily housing starts increased to a seasonally adjusted rate of 327,000 units, 7.5 percent above the June pace, but 8.4 percent below a year earlier.

Construction of new homes and apartments increased across all regions for the month. The West increased 15.8 percent, the Northeast increased 15.7 percent and the Midwest and South both increased 4.3 percent.

Issuance of total building permits increased 5.7 percent from June to a seasonably adjusted rate of 2.055 million units. This was 8.6 percent above July 2003. Single-family permit issuance increased by 1.5 percent and multifamily permits were up 38.6 percent from the June pace.

“Builders are positioned quite well. Inventories remain lean, there’s a sizeable backlog of unfilled orders and buyer demand promises to remain strong,” said Carliner. “This bodes well for house prices and production in the coming months.”