Sin­gle-fam­ily houses fuel gains in US home­build­ing in July


U.S. builders started work on sin­gle-fam­ily houses last month at the fastest pace since the Great Re­ces­sion be­gan in late 2007.

Hous­ing starts in Au­gust rose 0.2 per­cent to a sea­son­ally ad­justed an­nual rate of 1.21 mil­lion homes, the U.S. Com­merce Depart­ment said Tues­day. Con­struc­tion of sin­gle-fam­ily houses ac­counted for all of the gains, shoot­ing up 12.8 per­cent last month to the high­est rate since De­cem­ber 2007.

Fu­eled by steady job gains and low mort­gage rates, to­tal hous­ing starts have risen 11.3 per­cent year-to-date. The mar­ket is at­tract­ing more buy­ers and renters, as starts for apart­ment build­ings have climbed 12.2 per­cent so far this year de­spite last month’s drop.

But the re­port also showed the po­ten­tial lim­its of new con­struc­tion as af­ford­abil­ity pres­sures are mul­ti­ply­ing in an econ­omy with solid job growth but mea­ger pay raises.

“It is in all like­li­hood go­ing to take another leg up in new sin­gle­fam­ily home sales to sus­tain the pace of sin­gle fam­ily starts that was recorded in July,” said Joshua Shapiro, chief U.S. economist at the con­sul­tancy MFR.

Ap­proved build­ing per­mits de­creased 16.3 per­cent in July to an an­nual rate of 1.12 mil­lion, af­ter achiev­ing an eight-year high in June.

The de­crease likely re­flects some pull­back af­ter months of gains and was caused pri­mar­ily by a sharp plunge in per­mits to con­struct apart­ment com­plexes af­ter a tax break ex­pired in New York.

Home­buy­ers and renters have crowded into the hous­ing mar­ket this year, push­ing up prices to lev­els that have wors­ened af­ford­abil­ity and placed a po­ten­tial cap on sales growth.

Builders have re­lieved some of this fi­nan­cial pres­sure by ramp­ing up con­struc­tion, yet the in­creases in hous­ing starts and build­ing per­mits still lags the surg­ing de­mand.

The Na­tional As­so­ci­a­tion of Home Builders/Wells Fargo builder sen­ti­ment in­dex re­leased Mon­day reached 61 this month, up from 60 in July. Any read­ing above 50 sig­nals ex­pan­sion.

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