July housing statistics
The National Association of Home Builders announced yesterday that builder confidence remained relatively stagnant in light of decreased optimism about sales over the next six months.
Inventory levels remain high and deeply discounted foreclosures and short sales continue to create hot competition for builders, causing a dip in housing starts in July, yet starts still beat expectations, according to the U.S. Census Bureau.
Propped up by multi-family
The silver lining is that although housing starts dipped 1.5% from June, starts rose almost 10% from July 2010. Housing starts continue to be propped up by multi-family which actually rose 6.3% in July, while single-family homes dipped 4.9%.
Starts rose in the north-east and south, but those increases were outweighed by declines in the midwest and west.
As an indicator for future starts, we look to permits issued which dipped lower in July than had been projected, remaining only 0.5% higher than June.
When is a recovery coming?
“Residential construction remains depressed until we see new home sales improve significantly. We are at least six to 12 months away from that. The economy is still weak. Home builders are pulling back. Everyone is on recession watch,” Robert Dye, Chief Economist at Comerica told Reuters.
“The multi-family market is going to be stronger than the single-family market. That is where we are going to see a relatively tighter market, but that market has always been volatile,” he said.
Peter Boockvar, Equity Strategist at Miller Tabak + Co said, “The positive trend in multi-family construction continues at the expense of single-family. On one hand, the market needs less single-family homes so slow starts are a positive but on the other hand, more new apartment buildings available will make it even less attractive to buy existing homes.”
“Irrespective, the market is continuing to adjust to a reduction in the national home ownership rate at the same time the supply of existing single family homes remain excessive,” Boockvar noted.
