New home construction gathered pace in July, a development that if sustained, could add jobs and income to the economy in the second half of the year.
Housing starts rose 15.7 percent in July to an annualized rate of 1.093 million according to the Commerce Department today, almost double the 8.1 percent gain forecast by economists. That is the largest number of projects since the post-recession high of 1.105 million last November. The surge was driven by a 28.9 percent in apartment construction. Single family home groundbreakings rose 8.3 percent. Overall new contruction is up 22 percent on the year.
Building permits jumped 8.1 percent to 1.052 million annualized, and that was almost three times the 2.8 percent predicted gain.
Though the housing market has made a substantial recovery in the past year, both starts and permits remain well below the 15 year average from 1985 to 1999. In that decade and a half housing starts averaged 1.449 million per year and permits were 1.403 million. The U.S. population has increased 23 percent on the average of those years.
Sales of previously occupied homes have risen for four straight months and at 5.04 million annual units June are not far from the 5.51 million average annual sales from 1999 to 2003. The July rate will be released on Thursday.
Selling has been aided by improvements in the jobs market and mortgage rates which are modestly lower on the year but near the bottom of their historical range.
But sales of new homes have not seen the same percentage gains over the past two years, having been restrained, at least partly, by the lack of inventory. Home builders have been reluctant to commit to a new projects while economic growth has remained painfully slow. That attitude may be changing.
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