Housing start and building permit data released by the Commerce Department on Wednesday painted a mixed picture for the future of the beleaguered U.S. housing market.
Privately-owned housing starts jumped a notable 6.9 percent to a seasonally adjusted annual rate of 760,000 in June compared to revised figures for May. Furthermore, the May estimate was revised up to 711,000 from the 708,000 initially reported.
Most economists had predicted a rebound in new housing starts for June, though most had forecast the rate rising to a somewhat lower level of 745,000.
With the bigger than expected rebound, which came after starts fell 4.8 percent in May, housing starts reached their highest level since October of 2008.
Peter Boockvar, managing director at Miller Tabak, said, "While we can continue to argue that who needs new homes with still so much inventory out there, single family starts are still 62% below the highs in July '06."
Meanwhile, new building permits slipped to a seasonally adjusted annual rate of 755,000 in June, representing a 3.7 percent decline from May levels.
While the May data for building permits was upwardly revised to 784,000 from the 780,000 rate initially reported, most economists had expected new permits to hold at a higher 775,000 rate.
The drop by building permits came after they reached their highest level since September of 2008 in the previous month.
Building permits are often seen as an indicator of the direction of new housing starts in upcoming months.
New housing starts were especially strong for buildings with five or more units, which saw a 17 percent increase in June. Single family housing starts were also up a notable 4.7 percent for the month.
In the South, the nation's largest housing market as defined by the Commerce Department, a modest 1.1 percent increase in single family housing starts was not enough to offset a decline in multi-family starts, resulting in a 4.2 percent overall drop.
Meanwhile, housing starts in the West surged up by 36.9 percent, fueled by strong growth in multi-family housing. Single-family housing starts in the West were also up by 5.5 percent.
In the Midwest, the pattern of housing starts largely mirrored the situation in the South, with overall housing starts down 7.3 percent despite a 4.6 percent increase in single family housing.
The Northeast, a relatively small market where changes that would be less significant in total numbers can often result in large percentage changes, saw a 22.2 percent jump in new housing starts amid a 25.6 percent spike in single-family starts.
by RTT Staff Writer
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