Housing Starts Rise, Permits Fall

The Census Bureau reported(.pdf) that housing starts rose 1.7 percent in July, but permits for new construction fell 3.1 percent as residential construction remains in the doldrums, only a small and very short-lived boost coming from the recently expired homebuyer tax credit.

Both measures of new home construction fell short of expectations. Housing starts rose from a downwardly revised annual rate of 537,000 units in June to 546,000 in July, about 20,000 short of consensus estimates, while permits for new construction fell from a downwardly revised rate of 583,000 to just 565,000, the lowest level in 14 months.

Multi-family home construction drove the overall gain for housing starts, up 33 percent in July after a similar sized drop in June. Single-family home starts fell 4.2 percent last month following a 1.7 percent decline the month before and the outlook remains bleak for the homebuilders, as confirmed by the 17-month low in the housing market index yesterday.

Tim Iacono

Iacono Research.com

Tim Iacono is the founder of Iacono Research which provides market commentary and investment advisory services specializing in macroeconomic analysis and commodity based investing. He also writes the popular blog The Mess That Greenspan Made.