The housing market, which had hit the proverbial soft spot in the spring, rebounded strongly last month, with housing starts surging to an eight-month high, coming in at an annualized rate of 1,093,000 units. Not only was that 15.7% above the upwardly revised June pace of 945,000 homes, but it was 21.7% higher than the July, 2013 level of 898,000 starts.
Meanwhile, building permits, a more forward-looking metric, came in at a seasonally adjusted 1,052,000 homes. That was 8.1% better that the revised June rate of 973,000 permits. A year ago, permits had totaled 977,000 homes, annually.
By region, starts surged by 44.0% in the Northeast, the country's smallest locale, but they fell 24.8% in the Midwest, the second smallest region. Also, starts jumped by 29.0% in the South, which is the nation's largest area, accounting last month for almost 47% of total starts. Finally, new building rose 18.6% in the West.
The gains follow an early year lull, brought about by the inclement weather at the start of 2014 and by some interest-rate concerns thereafter. It should be noted that this is a volatile series and is subject to, at times, major revisions. On point, the June tally for starts, initially given as 893,000 homes, was revised up sharply to the aforementioned 945,000 units.
Looked at as a whole, this was a very strong and reassuring report and one that gives us confidence that the recent pullback in housing was temporary in nature. Our sense is that housing will still be a formidable factor going forward. Couple this data with other recent releases and it still suggests that the nation's economy will expand by 3.5%, or so, in the current quarter, following an outsized increase in GDP of 4.0% in the second quarter.