July housing starts, permits dip

We just got the latest data on home construction. Here’s a recap of what they showed:

* Overall housing starts dipped to 581,000 in July from 587,000 in June. That 1% decline left starts running a bit below the average forecast of economists (599,000). Building permit activity slumped to a seasonally adjusted annual rate of 560,000 from 570,000 against expectations for a reading of 577,000.

* By property type, single family construction activity increased for the fifth month in a row, rising 1.7%. Multifamily construction, on the other hand, fell for a second month. It dropped 13.3%. Single family permits showed a healthy gain of 5.8%, while multifamily permits reversed all of last month’s rise and then some, falling by 25.5%.

* Regionally, starts fell in three out of four geographic areas. They declined 1.4% in the South, 1.6% in the West, and 16.3% in the Northeast. Starts rose 12.9% in the Midwest. On the permitting front, activity was mixed. Permits rose 7% in the West and 14.1% in the Midwest. They fell 5.2% in the Northeast and 9.2% in the South.

The housing news was a mixed bag this time around. While overall construction and permitting activity was a bit disappointing, the weakness was confined to the multifamily side of the business. Single family home construction actually rose for a fifth straight month, while single-family permits showed a healthy gain of almost 6%.

Construction activity remains low, historically speaking. But evidence continues to mount that the worst of the declines for this cycle are behind us. Still, that doesn’t mean we’re going to see a huge resurgence in construction. After all, buyers still have plenty of homes to choose from, and distressed and foreclosed properties will continue to flood the market well into 2010.

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