Housing Starts, Permits Show Unexpected Improvement

By: Jann Swanson • Tue, Jul 19 2011, 3:57 PM

Driven by a dramatic rise in multi-family construction, U.S. housing jumped unexpectedly to of an annualized rate of 629,000 housing units in June. This was an increase of 14.6 percent over May figures which were adjusted down by 11,000 units to 549,000. The +3.5 reported earlier as a May over April increase has now been revised to "unchanged."

According to figures released Tuesday by the Census Bureau, multi-family starts increased by 30.4 percent in June to an annual rate of 176,000 units while single-family starts rose to 453,000, a 9.4 percent increase over May. The Census Bureau said that the June housing starts were the highest seen since January and single-family starts were the highest since last November.

Economists surveyed by Reuters before the data was released had predicted that the June figures would bring the rate to 575,000 units. While June 2011 figures were running 16.7 percent above the rate in June 2010, housing starts still pale in comparison to the two million plus annual housing starts that were common during the peak years of the housing boom.

Other Census data released bodes well for future construction. Housing permits were up 2.5 percent to a 624,000 rate. This is on the heels of an 8.2 percent rise in May. Economists had predicted that June's permitting figures would come in at a much lower rate of 600,000. Single family permits were at a rate of 407,000 only a fractional increase over the revised May figure of 406,000. Permits for units in buildings of five or more units rose substantial from a rate of 134,000 in May to 198,000.

The Commerce Department attributed the rise in housing starts to a growing demand for rental apartments. A press release from the Department said that an overhang of existing homes has "left builders with little appetite to break ground on new projects and is frustrating the housing sector's recovery. But demand for rentals, as Americans shun homeownership because of plummeting home prices, is stemming further declines in the housing market."