Housing Starts Down Slightly, Remodeling Activity Continues Climb
Nationwide housing starts edged down 1.5 percent to a seasonally adjusted annual rate of 604,000 units in July, according to figures released by the U.S. Commerce Department today. The slight decline comes on the heels of significant gains in housing production in June and was attributable to a moderate drop-off on the single-family side while production of multifamily units continued upward.
Single-family housing starts declined 4.9 percent to a seasonally adjusted annual rate of 425,000 units in July, on par with their second-quarter average. Multifamily starts rose 7.8 percent to a seasonally adjusted annual rate of 179,000 units, their highest level since January. Issuance of building permits, which can be an indicator of future building activity, fell 3.2 percent to a seasonally adjusted annual rate of 597,000 units in July.
“Overall housing production held relatively steady in July, with construction of new multifamily projects showing greater strength due to higher demand for rental units,” noted David Crowe, chief economist for the National Association of Home Builders. “Going forward, we expect housing production to show modest improvement through the end of this year, particularly in select markets that do not have large inventories of distressed homes and where economic stability is more apparent.”
Starts activity was mixed across the four regions in July, with the Northeast’s 34.7 percent gain countered by a 37.7 percent decline in the Midwest, a 5.6 percent gain reported in the South and a 3 percent decline posted in the West.
The NAHB/Wells Fargo Housing Market Index for August indicated that builder confidence in the market for newly built, single-family homes is unchanged from the previous month.
“Builders continue to confront the same major challenges they have seen over the past year, including competition from the large inventory of distressed homes on the market, inaccurate appraisal values, and issues with their buyers not being able to sell an existing home or qualify for favorable mortgage rates because of overly tight underwriting requirements,” said Bob Nielsen, NAHB chairman and a home builder from Reno, Nev. He noted that 41 percent of respondents to a special questions section of the HMI indicated they had lost sales contracts due to buyers’ inability to sell their current homes.
Remodeling Reaches Record Levels In JuneEven as the economy continues to struggle and home sales sag, the remodeling industry continued to be a bright spot in June, according to BuildFax, which tracks building, remodeling and repair data on more than 70 million homes nationwide. The BuildFax Remodeling Index shows that June 2011 became the month with the highest level of remodeling activity since the index was introduced in 2004.
“The first half of 2011 brought pain to many sectors of the economy including home sales and jobs, however Americans continue to invest in remodeling,” said Joe Emison, vice president of research and development at BuildFax. “With so many Americans unable to sell their current home, it is apparent that they are planning on staying in their current residences and are making renovations and upgrades.”
The June 2011 index rose 23 percent year-over-year to 129.5, the highest number ever in the index to date. The West (7.3 points; 6 percent), the Midwest (11.2 points; 13 percent), and the South (<.1 points; <1 percent) all had month-over-month gains, while the Northeast saw a decline (3.7 points; 4 percent). However, the Northeast was up 1.6 points (2 percent) from June of 2010, as was the West (24.4 points; 24 percent) and the South (7.6 points; 8 percent). The Midwest was down slightly year-over-year (1 point; 1 percent), but much less so than the previous month (10.6 points; 11 percent).