Housing starts in July at highest level since before recession

Building permits, an indicator of future activity, tumbled 16.3 percent in July to an annual rate of 1.119 million, below the consensus estimate of 1.257 million.

As a direct result, the volume of new property below remodeling also increased in July for a seven-year intense. The drop in permits issued fell sharply in the Northeast, falling 60.2 percent month-over-month.

While the housing market is the healthiest it’s been in years, it still hasn’t come close to precession peaks.

Builders have relieved some of this financial pressure by ramping up construction, yet the increases in housing starts and building permits still lags the surging demand. The National Association of Home Builders’ confidence index rose to its highest level since November 2005, to a reading of 61 in August, the group said Monday.

But relatively few new supplies of houses and apartment complexes are coming onto the market. Most of that can be tied to the expiration of an incentive to build apartments in New York. But even in the rental sector, prices are increasing at double the rate of hourly wage growth. The pickup in June was driven entirely by construction of multifamily housing units, which generally provide less of a boost to the economy compared with single- family homes. Average hourly earnings have improved a mere 2.1 percent.

“A lot of this has been in the works for a while”, said Selma Hepp, chief economist at Trulia.

Low mortgage rates have also helped sales.

Most of the new construction in July took place in the South, where starts climbed 7.7% to a 589,000 annual rate.

Building permits had been expected to pull back to a rate of 1.230 million from the 1.343 million originally reported for the previous month, reflecting an 8.4% decrease. The average 30-year, fixed mortgage rate was 3.94 percent last week, according to the mortgage firm Freddie Mac.