Housing Starts a Mixed Bag

Data released by the U.S. Census Bureau in conjunction with the Department of Housing and Urban Development indicates that privately-owned housing starts were at a seasonally adjusted annual rate of 896,000 in July, 6% above the upwardly revised June estimate of 846,000 and 21% above the July 2012 rate of 741,000.

The month-over-month increase in housing starts reflects sizeable gains in multifamily housing. According to the release, multifamily housing starts rose by 26% over the month of July to a seasonally adjusted annual rate of 305,000, partially offsetting the 25% decline that took place in June. On a 3-month moving average basis, which smoothes the volatility, multifamily housing starts increased by 6% to 290,000. Despite the increase, the 3-month average of multifamily housing starts remains below the 300,000 level that was recorded in the first five months of the year.

Meanwhile, growth in total private housing starts was partly restrained by a slight dip in single-family housing starts. Over the month of July, single-family housing starts fell 2% to 591,000 units. Geographically, the month-over-month declines took place in the South (-5%) and in the West (-10%), while single-family housing starts in the Northeast (+12%) and the Midwest (+10%) rose. The decline in single-family housing starts that took place in the South and in the West may partly reflect higher than average precipitation over the month of July. According to the National Oceanic and Atmospheric Administration, rainfall across the country was higher than normal in July with parts of the South and the West experiencing the most rainfall July relative to their normal levels. Despite the slight monthly decline in single-family housing starts, the underlying trend remains basically unchanged. On a 3-month moving average basis, single-family housing starts were 597,000, 0.1% below its level in June.