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New Residential Construction (Census Bureau) July 09

(August 18, 2009 Release)


• Residential housing construction registered 581,000 units in July, down 1.0 percent from June. Total starts are hovering near highest levels since November of last year.
• The 3 month average is 573,000 which has risen during the past two months.

• The decrease in starts were due to primarily to a 13.3 percent drop in multi-family starts. Single family starts were up 1.7 percent in July.
• Building permits fell 1.4 percent in July to 560,000, which does not portend favorably for future residential construction activity.

Source: Census Bureau

New Residential Construction (Mil. SAAR)
July 09 June 09 3 mo Avg 6 mo Avg
Housing Starts 0.581 0.587 0.573 0.549
% change -1.0 6.5
Single Family 0.490 0.482 0.460 0.359
% change 1.7 17.8
Multi-Family 0.091 0.105 0.113 0.134
% change -13.3 -26.1
Northeast 0.067 0.080 0.069 0.064
% change -16.2 35.6
Midwest 0.114 0.101 0.098 0.095
% change 12.9 27.8
South 0.276 0.280 0.277 0.274
% change -1.4 1.4
West 0.124 0.126 0.129 0.116
% change -1.6 -8.0
Total Building Permits 0.560 0.570 0.549 0.534
% change -1.7 10.0


The modest decline in housing starts was due to a relatively large drop in multifamily starts, while single family starts rose 1.7 percent in July. Single family starts are now at their highest pace since October of last year. However, single family starts are still 22 percent below the pace of a year ago. Total permits dropped by 1.7 percent in July and are now 39 percent below their year ago pace.

New residential construction activity has been trending slight upward since bottoming in January of this year. Thus, it appears that homebuilding has stabilized somewhat. Today’s housing starts data suggests that the housing sector may be improving. All three major housing measures- starts, existing home sales and new home sales- are above their cyclical lows. And even though housing inventories remain excessive, the supply of homes on market has slowly come down. In fact, the new homes inventory levels are within a healthy range under normal housing conditions.

Looking forward, caution must be exercised with any outlook for new residential construction. The federal homebuyer tax credit expires in December which may slow homebuilding somewhat. In addition, mortgage rates have been trending upward and the economy continues to shed jobs. We can only hope that the fiscal stimulus package will eventually have a positive influence on the housing sector. Furthermore, we do expect that Obama’s foreclosure mitigation plan will eventually slow the pace of foreclosures, providing more opportunities for new home sales. On balance, the housing sector remains weak and there remain risks to the downside.

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