US home construction climbed to a 6-month high in July

U.S. homebuilders broke ground on more houses in July and applications for building permits fell slightly compared with the prior month, the U.S. Department of Commerce reported on Tuesday.

Housing starts in the USA increased in July to the fastest pace in five months, while building permits dipped slightly from the previous month’s rate for the third consecutive time, according to data released Tuesday by the Commerce Department. Year-over-Year, completions of single-family homes are up most in the Midwest (24.8%), and the South (21.2%), while the Northeast region changed 0% from the rate of one-unit completions seen in July 2015.

Residential starts increased 2.1% to a seasonally adjusted annual rate of 1.211 million, besting analysts’ consensus estimates of 1.18 million.

Privately-owned housing units authorized by building permits, a gauge of future construction, were at a seasonally adjusted annual rate of 1,152,000, down 0.1 percent from the revised June rate. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year”. 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.

Still, future gains may be limited as current housing starts are outpacing permits to build in the future. However, their views about prospective buyer traffic softened a bit. That was the highest level since February.

Construction climbed 15.3 percent in the Northeast. The July rate for units in buildings with five units or more was 433,000. July was the third consecutive month of increases for one-unit starts. 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.