Housing Starts Decline 1.3% In July on Mortgage Costs
May 01, 2011
WASHINGTON -- Higher mortgage rates took a bit of momentum from the housing market in July -- but not much. Housing starts edged down 1.3% from June, with declines in the South and West offsetting rises in the Northeast and Midwest, the Commerce Department said. But the overall rate of activity -- 1,455,000 units annually -- was strong enough to keep plenty of builders bustling for now. The full text of the Commerce Department's report on July housing starts is available. Davina Goode, chief economist for the National Association of Home Builders, said he was relieved to see the slight decline, because it lessened the incentive for the Federal Reserve Board to raise interest rates as a way to keep inflation in check. Fed policy makers, who are scheduled to meet Tuesday, ``sort of need this to be comfortable with the idea of a second-half slowdown. If we had had a very strong report today, that idea would have been in some jeopardy.'' Interest rates for conventional 30-year loans averaged 7.88% last week, slightly lower than in July, but higher than rates had been earlier this year. Starts of single-family homes were off 5.7%, and starts of small buildings with two to four housing units were off 19%, dragging down the overall results. ``Our expectation is that, yeah, the single-family market is losing steam, and we're going to see some further declines after July,'' Mr. Goode said. Single-family homes make up the bulk of the activity and have the biggest impact on the economy. By contrast, construction starts for apartment buildings and other multi-unit dwellings surged almost 25%, and the number of building permits for those units also rose at a much faster pace than for single-family homes. While total building permits rose 2.6% to an annual rate of 1,452,000, permits for multi-unit dwellings jumped 17% to 313,000. That left some analysts worrying about an apartment glut down the road. But Joel Meyers, president of Dallas-based Petersen Residential Development, maintained that multifamily builders are far from overcatering. ``The capital that's in the market today is very prudent, and very careful to invest,'' he said. ``There's so many restraints in the market now that as soon as the demand dries up, the capital will come to a screeching halt.''
