U.S. Building Permits Down 0.1% in July
Housing Starts Up 2.1%
Obtaining a building permit is one of the first steps in constructing a new building. Therefore, the number of building permits can be a great gauge of future construction activity. On Tuesday, August 16, the U.S. Department of Commerce released its latest report on new residential construction.
In the month of July, privately owned housing units authorized by building permits were at a seasonally adjusted annual rate of 1.152 million. This represented a 0.1% decline from June’s annual rate of 1.l53 million, but was 0.9% higher than the 1.142 million reported in July 2015. (Source: “New Residential Construction In July 2016,” U.S. Department of Commerce, August 16, 2016.)
In particular, authorizations for single-family homes were at an annual rate of 711,000 in July, up 3.7% from June’s revised annual rate of 738,000. Building permits issued for buildings with five units or more were at an annual rate of 433,000.
The report also consists of data on housing starts and completions. In July, privately owned housing starts were at a seasonally adjusted annual rate of 1.211 million. This represented a 2.1% increase from June’s revised estimate of 1.186 million and was also up 5.6% year-over-year.
Privately owned housing completions in July were at a seasonally adjusted annual rate of 1.025 million. This means an 8.3% decline from June’s estimate of 1,119 million but is 3.2% higher than the annual rate of 994,000 seen in July 2015.
“The big picture for housing remains very positive,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “Sales are up, despite a shortage of homes on the market in many cities and rapid price appreciation. Thus, builders have every incentive to get as many new homes built as they can.” (Source: “U.S. Building Permits Fell 0.1% in July,” The Wall Street Journal, August 16, 2016.)
On Monday, the National Association of Home Builders (NAHB) said that builder confidence in the market for newly constructed single-family homes in August rose two points to 60, from a downwardly revised reading of 58 in July. The NAHB’s chief economist, Robert Dietz, said that, “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.” (Source: “Builder Confidence Rises Two Points in August,” National Association of Home Builders, August 15, 2016.)