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Economy in Brief

U.S. Housing Starts Dip During July After Two Months Of Strong Gains Multi-family Starts Revisit Record Low
by Tom Moeller August 18, 2009

After two months of fairly strong increases, the momentum in the housing sector paused last month. Housing starts dipped to 581,000 (AR) units versus 587,000 during June, a level which was revised up slightly from the initial report. The latest figure fell somewhat short of Consensus expectations for 600,000 starts.

Despite the overall decline, starts of single-family homes rose 1.7% for the fifth straight month. The gains pushed the series 37.3% off the record low which dates back to 1959. During the last ten years, there has been an 84% correlation between the q/q change in single-family starts and their contribution to quarterly GDP growth.

Starts of multi-family homes fell hard again to 91,000 which was the record low for the series. Starts of apartments, condominiums & town houses remained down by roughly two-thirds from the 2006 peak.

By region starts of single-family units last month were mixed across the country. Single-family starts in the Northeast rose 14.0% to their highest level since October (-16.2% y/y). Starts in the West ticked up 1.9% for the fifth straight month of increase (-23.6% y/y) and in the South single-family starts also ticked up by 0.8% (-23.4% y/y). In the Midwest starts fell a modest 3.4% (-22.2% y/y) after five consecutive months of increase.

Overall, building permits fell 1.8% and gave back a piece of their 10.0% jump during June. Permits remained just above the record low and permits were down by roughly one-half from last May. As with starts, recent gains in building permits have been led by the single-family sector, a leading indicator of starts. During July, permits rose for the fourth straight month and were up 23.8% since December (-20.3% y/y).

The housing starts figures can be found in Haver's USECON database.

Examining the Housing Crisis by Home Price Tier from the Federal Reserve Bank of St. Louis can be found here.

Housing Starts (000s, SAAR) July June Y/Y 2008 2007 2006
Total 581 587 -37.7% 900 1,342 1,812
Single-Family 490 482 -22.5 616 1,036 1,474
Multi-Family 91 105 -69.8 285 306 338
Building Permits 560 570 -39.4 895 1,392 1,844
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