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Builders See Slow, Steady Growth

Thursday, July 21, 2016

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U.S. builders broke ground on new homes at a slightly faster pace in June, signifying that the market continues to inch toward recovery, new federal data shows.

Housing starts climbed 4.8 percent from May to a seasonally adjusted annual rate of 1.19 million units, the U.S. Commerce Department and the U.S. Department of Housing and Urban Development announced Tuesday (July 19). While an improvement from May, the figure is 2 percent below the June 2015 estimate of 1.21 million units.

Apartment building construction
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Multifamily production increased 5.4 percent in June, to reach 411,000 units, new federal data shows.

Applications for building permits, a gauge of future homebuilding activity, increased 1.5 percent above the revised May rate, to a seasonally adjusted annual rate of 1.15 million.

Moving Forward

“This month's uptick in production is an indicator that the housing market continues to move forward,” National Association of Home Builders Chairman Ed Brady said in a statement.

"At the same time, builders are adding inventory at a cautious pace as they face lot shortages and regulatory hurdles."

The NAHB also reported Monday (July 18) that builder confidence in the market has dropped slightly.

Gains by Sector

Single-family home starts reached 778,000 units, an increase of 4.4 percent from revised May figures, according to NAHB's analysis of the new data.

Multifamily production increased 5.4 percent to 411,000 units.

By region, combined single- and multifamily starts increased in the Northeast and West, with respective gains of 46.3 percent and 17.4 percent in June. The Midwest logged a 5.2 percent loss and the South fell 3.4 percent. However, single-family production jumped in all four regions.

Both sectors posted permit gains. Single-family permits inched 1 percent to a rate of 738,000, while multifamily permits rose 2.5 percent to 415,000.

By region, permit issuance increased 9.4 percent in the Northeast and 8.3 percent in the South. Meanwhile, the Midwest and West reported losses of 2.8 percent and 10.1 percent, respectively.

“The June report is consistent with our forecast for a gradual but consistent recovery of the housing market,” said NAHB Chief Economist Robert Dietz. “Single-family production should continue to strengthen throughout the year, buoyed by job growth, new household formations and low mortgage interest rates.”

   

Tagged categories: Business conditions; Contractors; Economy; Housing; Housing starts; Market; Residential Construction

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