Housing Starts Up


NEW YORK (CNNMoney.com) — New home building increased overall in August, a government report said Thursday, but the gain was clouded by a dip in new construction of single-family homes.

The Census Bureau reported Thursday that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July. That matched a consensus analyst forecast compiled by Briefing.com.

Building permits rose 2.7% to 579,000 from a revised 564,000 in July.

A troubling aspect of the report was that starts of new single-family homes fell 3% in the month. Overall starts were higher due to a big gain in multi-family housing starts.

According to economist Jeff Rosen of Briefing.com, multi-family home starts tend to vary much more than those of single family homes. He places more importance on the drop in single families than what could be an anomalous rise in multi-family starts.

The housing starts report was the latest in a series of releases that indicate that the market may have bottomed. These include improvement in new home sales, existing home sales and housing prices.

On Wednesday, the National Association of Home Builders reported their index of homebuilder confidence had risen a point to 19, its highest level since May 2008.

Helping to boost demand for new homes has been the first-time homebuyer tax credit, which has enabled many builders to reduce their inventories of unsold homes.

“Many builders have not only reduced excess inventory, but now are actually reporting such low inventory that they need to start more homes to replace those they’ve just sold,” said Brad Hunter, chief economist for Metrostudy, a real estate analytics firm.

Both starts and permits are still well off from their levels of a year ago. The number of starts is down 29.6% from 849,000 last August, and permits dropped 32.4% from 857,000 last year.