New housing construction in the U.S. dipped more than expected in July, but a much stronger than expected jump in building permits offers hopes for the future of the beleaguered housing market.
According to figures released Thursday by the Commerce Department, new privately-owned housing starts came in at a seasonally adjusted annual rate of 746,000 in July, a 1.1 percent drop from the revised June estimate of 754,000.
Economists had predicted a drop in housing starts following the rebound in June, but most had expected starts to come in at a somewhat higher annual rate of 750,000.
The rebound in June also proved to be somewhat weaker than initially reported. Preliminary figures had put the June rate of housing starts at 760,000.
However, new building permits, often viewed as an indicator of future housing starts, saw a substantial jump in July, rising 6.8 percent to a seasonally adjusted annual rate of 812,000 - the highest level since August of 2008.
The increase comes atop revised figures that showed June building permits were revised up to 760,000 from the 755,000 initially reported.
Economists had predicted that building permits would rebound after falling from May to June, but most had expected the July figure to rise much more modestly to a rate of 766,000.
Compared to July of 2011, housing starts were up by 21.5 percent, while building permits were up by 29.5 percent.
The drop in overall housing starts was driven by a 6.5 percent decline in single family homes, which fell to an annual rate of 502,000. The decrease was partly offset by a 12.4 percent increase in construction of building with two or more units.
Regional data from the Commerce Department showed the drop in housing starts was spread broadly across the country, with the South, West and Northeast all showing declines in both overall housing starts and starts of single family dwellings.
Housing starts in the Midwest were up 17 percent overall, driven by increased construction of multi-family dwellings. Single family housing starts in the Midwest fell 5.6 percent.
The National Association of Home Builders released a separate report on Wednesday showing that its index of homebuilder confidence climbed to 37 in August from 35 in July.
The increase came as a surprise to economists, who had expected the index to come in unchanged compared to the previous month.
With the unexpected increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007.
by RTT Staff Writer
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