NAHB Chair Calls July Housing Slide a Sign of "Relative Stability"

NAHB Chair Calls July Housing Slide a Sign of "Relative Stability"

(August 16, 2011) -- Nationwide housing starts edged down 1.5% to a seasonally adjusted annual rate of 604,000 units in July, according to figures released by the U.S. Commerce Department today. The slight decline comes on the heels of significant gains in housing production in June, and was attributable to a moderate drop-off on the single-family side while production of multifamily units continued upward.

"Although single-family housing production slid a few notches in July, the number was right in line with the second quarter average, so we view this report as an indication of relative stability," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "This is in keeping with the fact that not much has changed over the past several months with regard to the outlook for new-home sales and production. Both builders and buyers continue to exercise a great deal of caution due to uncertainty about the current economic climate, the large number of foreclosed homes on the market, and concerns about access to credit."

"Overall housing production held relatively steady in July, with construction of new multifamily projects showing greater strength due to higher demand for rental units," noted NAHB Chief Economist David Crowe. "Going forward, we expect housing production to show modest improvement through the end of this year, particularly in select markets that do not have large inventories of distressed homes and where economic stability is more apparent."

Single-family housing starts declined 4.9% to a seasonally adjusted annual rate of 425,000 units in July, on par with their second-quarter average. Multifamily starts rose 7.8% to a seasonally adjusted annual rate of 179,000 units, their highest level since January.

Starts activity was mixed across the four regions in July, with the Northeast's 34.7% gain countered by a 37.7% decline in the Midwest, a 5.6% gain reported in the South, and a 3.0% decline posted in the West.

Issuance of building permits, which can be an indicator of future building activity, fell 3.2% to a seasonally adjusted annual rate of 597,000 units in July. While single-family permits were virtually unchanged with a 0.5% gain to 404,000 units, multifamily permits registered a 10.2% decline to 193,000 units.

Regionally, permits gained 18.3% in the Northeast and 3.6% in the South, but fell 7.1% in the Midwest and 7.8% in the West in July.