April 19, 2021

U.S. Housing Starts and Permits Rise Less Than Expected

The Commerce Department said on Friday that housing starts increased 5.9 percent to a seasonally adjusted annual rate of 896,000 units. June’s starts were revised up to show a 846,000-unit pace instead of the previously reported 836,000 units.

Economists polled by Reuters had expected groundbreaking to rise to a 900,000-unit rate last month.

Permits to build homes rose 2.7 percent in July to a 943,000-unit pace. Economists had expected permits to rise to a 945,000-unit pace.

“It’s not a surprise given the recent rise in mortgage rates. I think we are looking at a situation that some air is coming out of the housing recovery given the higher mortgage rates,” said Michael Hanson, senior economist with Bank of America Merrill Lynch in New York.

“At this point, affordability has not changed that much on a historical basis. Housing affordability remains high, but fundamentals are less favorable for new buyers than they were a couple of months ago.”

Mortgage rates have spiked in anticipation of the Federal Reserve tapering the $85 billion in bond purchases it is making monthly to keep interest rates low and stimulate the economy.

Economists expect the U.S. central bank to make an announcement on tapering at its policy meeting next month.

U.S. stocks were poised to open slightly higher after the data. The dollar pared gains against the yen and fell to a session low against the euro.

The residential construction figures last month could also be a reflection of supply constraints. Builders have been complaining about a shortage of labor and materials.

Still, residential construction remains on a firmer footing and should again contribute to economic growth this year.

A report on Thursday showed confidence among single-family homebuilders neared an eight-year high in August, with builders fairly upbeat about sales prospects over the next six months.

Though residential construction only accounts for about 3.1 percent of gross domestic product, housing has a wider reach in the economy. Analysts estimate that for every single-family home built, at least three jobs lasting for a year are created.

Economists expect average monthly housing starts for the whole of 2013 to top 1 million.

Last month, groundbreaking for single-family homes, the largest segment of the market, fell 2.2 percent to a 591,000-unit pace, the lowest level since November last year.

Starts for multi-family homes jumped 26 percent to a 305,000-unit rate, reversing the prior month’s decline.

Permits for multi-family homes rose 12.6 percent to a 330,000-unit rate. Permits for single-family homes fell 1.9 percent to a 613,000-unit pace.

A separate report from the Labor Department showed nonfarm productivity increased at an annual rate of 0.9 percent in the second quarter.

Productivity dropped at a rate of 1.7 percent in the first quarter. Unit labor costs – a gauge of labor-related costs for any given unit of output – rose at a rate of 1.4 percent in the second quarter after dropping in the first quarter at a rate of 4.2 percent.

(Reporting by Lucia Mutikani, additional reporting by Richard Leong in New York; Editing by Paul Simao)

Article source: http://www.nytimes.com/reuters/2013/08/16/business/16reuters-usa-economy.html?partner=rss&emc=rss

Housing Starts Rose 14% in June

The pace of new construction of private homes in the United States last month was the highest since January, according to government figures released on Tuesday, but economists warned that the sector had still not stabilized for a full recovery.

Builders broke ground at a seasonally adjusted annual rate of 629,000 units in June, a rise of more than 14 percent compared with the previous month and a rate that was 16.7 percent higher than June 2010, the Department of Commerce reported.

It was the highest since January, when construction starts came in at a 636,000-unit annual rate.

The numbers are used as an indicator of future economic activity because of their implications for consumer spending, hiring, housing inventory, prices and other factors.

But the data is also volatile, subject to seasonal and other influences. A report on the statistics from Capital Economics economists said that the June survey reflected the wake of severe weather in the previous months.

Last month’s increase “is not the start of a significant and sustained surge in homebuilding,” the report said. “Instead, it reflects a rebound in activity after the unusually severe tornados and floods depressed starts in both April and May.”

The rate for construction starts on single-family homes was 453,000 in June, up 9.3 percent from May, while the rate for buildings with five units or more was 170,000, up 31.8 percent, the report said.

The report also said that permits for new construction, an indicator of future activity, rose by 2.5 percent from May to a seasonally adjusted rate of 624,000 in June. It was up 6.7 percent compared with June 2010.

Within that category, permits for multifamily units rose 6.9 percent to a 217,000 annual rate, the highest level since October 2008. The category was up in the South, West and Midwest, but down in the Northeast.

“For once in a long time, there was some good news in this report,” said Patrick Newport, an economist at IHS Global Insight. “The market for multifamily homes is coming back to life — very slowly — but the foundations are in place.

“But this is partly because the single-family market is falling so badly people are inclined to rent,” he added.

The survey also showed that completion of new homes took place at a rate of 535,000, which was 1.7 percent higher than in May. With a glut of new homes already on the market, adding to the inventory would tend to dampen prices, economists said.

“The addition of new supply to the housing market isn’t really constructive insofar as housing prices are concerned, but any uptick in new-home construction should offer some relief on the employment front,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan Company, in a research note.

Article source: http://feeds.nytimes.com/click.phdo?i=7b565f763024c0184658cf8fcd221bd5