Daily Times

WASHINGTON: New US home construction picked up in July to the fastest pace in just over a year, supporting hopes for a rebound in overall economic growth in the third quarter. The Commerce Department said Tuesday that total housing starts rose 2.1 percent from June to an annual pace of 1.21 million units. That was the strongest pace since June 2015, when the pace was 1.23 million units per year – itself the best level of activity since 2007. Year-to-date actual construction at 685,000 units was 6.7 percent higher than the same period in 2015, with all the gains in single family units while multiple-unit housing was slightly lower. Analysts say housing demand remains pent up and is supported by near-record low mortgage rates. Building permits, another indicator of the strength in the sector, were flat in July from June and up 1.5 percent from a year ago. Investment in residential construction contracted in the second quarter for the first time in more than two years. That, together with an outright decline in inventory investment, a continued downturn in business spending and weak government outlays, held gross domestic product to a 1.2 percent annualized growth rate during the quarter. Against the backdrop of a tightening labor market, which is steadily driving up wages, economists expect a rebound in residential construction spending in the third quarter. But with housing starts still running ahead of permits, the anticipated bounce-back could be modest. A survey of homebuilders published on Monday showed confidence rising in August, with builders optimistic about sales now and over the next six months. However, their views about prospective buyer traffic softened a bit. Groundbreaking on single-family homes, the largest segment of the market rose 0.5 percent to a 770,000-unit pace in July, also the highest level since February. Single-family starts rose in the South and West, but tumbled 23.9 percent in the Northeast and fell 2.6 percent in the Midwest. Housing starts for the volatile multi-family segment increased 5.0 percent to a 441,000-unit pace. Groundbreaking on multi-family housing projects with five units or more jumped to the highest level since September 2015. The multi-family segment of the market continues to be supported by strong demand for rental accommodation as some Americans shun homeownership in the aftermath of the housing market collapse.