Housing Starts and Permits Up Strongly in June

       Home builders responded to improved market conditions and the impending expiration of the first-time home buyer tax credit in June by posting substantial gains in nationwide housing starts and permits, according to figures released by the U.S. Commerce Department last week.

       Commerce reported a 3.6% gain in overall housing starts to a seasonally adjusted annual rate of 582,000 units and an 8.7% gain in permit issuance to 563,000 units.

       “The upcoming expiration of the first-time home buyer tax credit on Dec. 1 is encouraging some builders to get homes started now so that they can be completed in time for clients to take advantage of this attractive buying incentive,” said NAHB Chairman Joe Robson. “However, there is still much concern about the difficulty of financing new-home production and continuing weakness in the job market.”

       “Today’s report was in keeping with our forecasts for some glimmers of improvement on the single-family side in the second quarter, and also with the results of our latest builder surveys,” said NAHB Chief Economist David Crowe. “Many remain very cautious, however, in the face of the severe tightening of credit for acquisition, development and construction financing and increased instances of low appraisals tied to improper use of distressed properties as comps, both of which threaten to derail a housing and economic recovery going forward.”

       Single-family housing starts rose for a fourth consecutive month in June, posting a 14.4% gain to a seasonally adjusted annual rate of 470,000 units, while single-family permits rose for a third consecutive month, posting a 5.9% gain to 430,000 units.

       Meanwhile, multifamily activity, which characteristically displays greater month-to-month volatility, was true to form. Multifamily starts posted a 25.8% decline following an unsustainably large gain in the previous month, to 112,000 units. Multifamily permits rose 18.8% to 133,000 units from an abnormal low in May.

       Regionally, housing starts were mixed, with the Northeast and Midwest posting big gains of 28.6% and 33.3%, respectively, and the South and West posting declines of 1.4% and 14.8%, respectively. However, the declines in both the South and West were entirely driven by dips in multifamily production.

       Permit issuance was up in all regions in June, with the Northeast posting a 5.4% gain, the Midwest a 3.4% gain, the South a nearly 14% gain and the West a nearly 2% gain.

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