The FINANCIAL -- U. S. home building ticked up in July thanks to a surge in construction of single-family homes, the latest sign of momentum in the housing market, according to Nasdaq.
U.S. housing starts rose 0.2% from a month earlier to a seasonally adjusted annual rate of 1.21 million last month, the highest since October 2007, the Commerce Department said on August 18. That is the third time in four months that the figures reached a new high since the recession began.
Starts on single-family units, which exclude apartments and represent almost two-thirds of the market, jumped 12.8% to their highest level since December 2007. Multifamily units, including apartments and condominiums, fell 17%.
New applications for building permits, a bellwether for construction in coming months, declined 16.3% to 1.1 million.
Economists surveyed by The Wall Street Journal had expected July housing starts to reach a rate of 1.19 million, and 1.25 million building permits to be issued.
Home-construction figures are volatile and often revised. Tuesday's report showed new-home construction rose 12.3% in June from the prior month, compared with an initially reported 9.8% jump. The pickup in June was driven entirely by construction of multifamily housing units, which generally provide less of a boost to the economy compared with single- family homes.
The June rise was also due in part to a surge in activity in New York City right before tax incentives for multifamily developments were scheduled to expire. Thus, many economists expected the pace would slow in July.
Construction levels for new homes remain historically low, though there are continued signs of growing underlying demand. Starts were 10.1% higher in July than a year ago, and permits were up 7.5%.
A forward-looking gauge of U.S. home purchases slipped in June, after hitting its highest level in more than nine years in May, the National Association of Realtors said last month. A separate report from the industry group showed sales of previously owned homes increased 3.2% in June to a seasonally adjusted annual rate of 5.49 million, the strongest since February 2007.
U.S. home builders also appear more optimistic this month. The National Association of Home Builders' confidence index rose to its highest level since November 2005, to a reading of 61 in August, the group said Monday. A reading above 50 means most builders generally hold a favorable view of the market for newly built, single-family homes.
The gulf between builder sentiment, which has skyrocketed, and slowly rising single-family starts has grown since 2011. Tuesday's report suggests activity in the single-family sector could finally be catching up, though the figures have a margin of error of 9.8%.
Federal Reserve Chairwoman Janet Yellen told lawmakers last month population growth is creating a need for more housing, but activity in the housing sector "seems likely to improve only gradually."
Fed officials appeared to upgrade their assessment of the housing recovery this summer in the statements following their policy meetings. After months of characterizing the housing recovery as "slow," they said the sector showed "some improvement" in June and "additional improvement" in July.
Tuesday's report showed housing starts climbed in the Midwest and South and fell in the Northeast and West.