Take away the South and nationwide housing starts would have been in positive territory this month.
Chicago, IL (PRWEB) July 25, 2014
Privately owned starts dropped 9.3 percent to a seasonally adjusted annual rate of 893,000 units, down from May's estimate of 985,000. Year over year, there was a 7.5 percent increase from 831,000 in June 2013.
For the single-family market specifically, there was a 9 percent decline, as starts fell from May's 632,000 figure to a rate of 575,000. The multifamily market saw a 9.9 percent reduction month over month, falling to a rate of 318,000. Additionally, starts for properties in buildings with five units or more were at 305,000.
According to a National Association of Home Builders (NAHB) report from July 17th, the nationwide declines for housing starts resulted from a nearly 30 percent drop in the South, as all other regions had growth in June.
"Take away the South and nationwide housing starts would have been in positive territory this month," said David Crowe, NAHB chief economist. "This sharp regional decline could be due in part to lots and labor shortages, which are particularly acute in that part of the country. However, the general direction of housing production is trending upward, and we expect 2014 to be a positive year."
The Wall Street Journal said on July 17th that the weak activity in the South was due to unusually wet weather in the winter and spring, which cut down on the number of lots that were ready for construction. Terry Russell, chief executive of Atlanta-based builder FrontDoor Communities, told the Journal that the development cycle has been elongated by an additional two to three months.
Permits also declined in June
Building permits, which provide an indication of future construction, were down to a seasonally adjusted annual rate of 963,000 in June, a 4.2 percent decrease from May's rate of about 1 million. However, there was a 2.7 percent rise above June 2013's estimate of 938,000.
In the single-family market, there was a 2.6 percent increase to a rate of 631,000, up from 615,000 in May. Year over year, there was a 0.6 percent gain from 627,000 in June 2013. Multifamily permits dropped 14.8 percent to 332,000.
"A modest 2.6 percent increase in single-family permits falls in line with the general optimism that we are hearing from our builders," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and developer and home builder from Wilmington, Delaware.
In the South specifically, weak permit activity was attributed to slow municipal processes, according to the Journal. This could be the result of short staffing in city building departments.
June completions fell short of May figures
Housing completions were at a seasonally adjusted annual rate of 789,000 in June, down 12 percent from May's estimate of 897,000. Year over year, there was a 3.4 percent increase from 763,000. The single-family market posted a 6.5 percent decline from May to June.
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