Single-Family Starts, Permits Drop In July

Led by multifamily activity, new housing permits and starts rose in July with new construction, continuing a shift from single-family homes. The ""Census Bureau and HUD"":http://www.census.gov/construction/nrc/pdf/newresconst_201307.pdf reported Friday builders broke ground on new homes at a seasonally adjusted annual rate of 896,000 units, up 5.9 percent from June, and filed permits for construction of 943,000 new units, up 2.7 percent from June.

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However the rate of single-family starts fell 13,000 (2.2 percent) to 591,000--the lowest level since last November--and the rate of single-family permit filings dropped 1.9 percent (12,000 to 613,000)--the lowest level since March.

Economists surveyed by Bloomberg had expected the pace of total starts to increase to 900,000 and total permits to increase to 918,000. The annualized rate of total starts for June was revised up to 846,000 from the originally reported 836,000; permits were revised to 918,000 from 911,000. There was no forecast for single-family activity.

The drop in both single-family permits and starts came despite increasing builder confidence. According to the National Association of Home Builders' (NAHB) Housing [COLUMN_BREAK]

Market Index (HMI), builder confidence has increase 34 percent in the last three months (June through August), though buyer traffic to showrooms has stalled.

According to the Census/HUD report, builders in July completed single-family homes at the rate of 571,000 in July--the fastest pace since March--up sharply, 5.9 percent (32,000) from June. Total completions rose 1.8 percent (14,000) to 774,000 in July from June's revised 760,000. The pace of total completions in June had originally been reported as 755,000.

In June, new home sales totaled 497,000, 42,000 fewer than the 539,000 completions that month. New home sales for July will be reported next week.

The July report on starts and permits continues the shift in building activity to multifamily housing. Single-family starts have averaged about 67.6 percent of all starts in the last 12 months, down from 69.3 percent in 12 months ending July 2012 and 74.4 percent in the previous 12 months.

In the last 12 months, single-family permits averaged 63.5 percent of total permits, down from 64.4 percent in the 12 months ending July 2012 and 69.9 percent in the 12 months ending July 2011.

The annualized rate of all permits rose 15,000 in the West to 225,000; 5,000 in the South to 463,000; 4,000 in the Midwest to 149,000; and 1,000 in the Northeast to 106,000.

Permits for single-family homes were up 3,000 in the Midwest to 105,000. They fell 9,000 in the West to 131,000; 5,000 in the South to 326,000; and 1,000 in the Northeast to 51,000.

_Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 a.m. Eastern._