Comparatively good news continues to flow through from the housing market, where within the past hour, the U.S. Commerce Department reported that housing starts picked up further, rising to an annualized rate of 760,000 homes in June. That was better than both the consensus forecast for the past month and the May level, which was revised up from an estimated 708,000 homes to 711,000 homes. In addition, the latest level of starts was a full 23.6% ahead of the June 2011 level of 615,000 housing units.
At the same time, the government reported that building permits, a more forward-looking metric, had come in at 755,000 homes in June. That was down 3.7% from the revised May total of 784,000 permits, and was a bit below expectations. However, the latest authorization rate was still more than 19% ahead of the June 2011 pace of 633,000 homes.
Returning to the data on starts, there was a 4.7% increase in single-family units and a 17% jump in starts of five, or more, units, commonly called multi-family homes. As to regions, there were strong gains in the Northeast and the West, with the latter area, the nation's second largest new home market, showing an outsized gain of almost 37%. On the other hand, starts eased in the Midwest and in the South, with this last region being, by far, the largest in the country.
All in all, it was the highest level of housing starts in nearly four years, as we have to go back to October of 2008 to get a greater monthly number. Ironically, housing had long been the weak link in the tenuous economic chain, but in recent months, it has been among the stronger segments in a weakening business expansion.
Of course, we still have a long ways to go on this front, as the latest housing total of 760,000 annual starts was less than a third of the 2.3 million homes started annually in early 2006. That was just before the long homebuilding bust had gotten under way. Of note, this sector will receive additional news tomorrow morning when the National Association of Realtors is scheduled to report on sales of existing homes for June. A modest gain is expected at that time.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.