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Economy in Brief

U.S. Housing Starts Sag Back to Low
by Carol Stone August 19, 2008

After June’s phantom jump in housing starts, which owed completely to a building code change in New York, they fell back in July by 11.0% to just 965,000 (S.A.A.R.). This was the lowest since 921,000 in March 1991. This month, both single-family and multi-family starts declined, by 2.9% and 23.6%, respectively. There were marginal upward revisions to June and May totals. As evident in the first graph, the total and the single-family amounts are not only the lowest since the last major housing contraction in 1991, but they are at levels that have only been since during periods of major housing distress.

At the same time, multi-family starts have been somewhat steadier. They retreated surely in July from their artificial surge in June, but their general pace has held up; in July, they numbered 324,000, just below their average over the last 10 years of 339,000. With the great weakness in single-family units, multi-family building now constitutes more than a third of new home construction.

By region in July, the Northeast reversed its June increase, but it remains the steadiest part of the country on trend, and actually stands 13.0% above a year ago. The July loss was all in multi-family, while single-family units there were up smartly, by 11.3%. Total starts were also down in the South and the West, both, coincidentally, by 8.2%. Starts rose in the Midwest in July, by 10.0%.

Building permits followed the same pattern as starts nationally in July, falling 17.7% after a June increase of 16.4%. Single-family permits dropped 5.2% in the month to 584,000, the weakest since September 1982.

Housing Starts (000s, SAAR) July June May Y/Y 2007 2006 2005
Total 965 1,084 982 -29.6% 1,341 1,812 2,073
Single-Family 641 660 682 -39.2% 1,034 1,474 1,719
Multi-Family 324 424 300 +2.5% 307 338 354
Building Permits 937 1,138 978 -32.4% 1,389 1,844 2,160
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