WASHINGTON (MarketWatch) — Housing starts slipped 1.5% in July, according to data released Tuesday that highlight the lack of demand for new homes.
Starts fell to a seasonally adjusted annual rate of 604,000, down from a downwardly revised 613,000 rate in June, the Commerce Department said.
Economists polled by MarketWatch had anticipated an annualized rate of 600,000 for July, and many had thought June’s initial reading of 629,000 was too strong.
Single-family starts slipped 4.9% last month to 425,000 from a downwardly revised 447,000. Demand to build new apartments was again strong in July, with starts for structures with five or more units up 6.3% to 170,000 — a surge of 66.7% from July 2010 levels.
In the South, the largest region for new homes, housing starts increased 5.6%. However, they slumped 37.7% in the Midwest and dropped 3% in the West while rising 34.7% in the Northeast.
Building permits, a less volatile statistic, fell 3.2% to an annual rate of 597,000 in July, and June’s data also were downwardly revised, to 617,000 from 624,000.
Demand for new homes has been weighed down by the proportion of cheaper, foreclosed existing homes that are available, as well as the high percentage of existing homeowners who are underwater with their mortgages.
Tight lending standards and high unemployment also have taken their toll on the nation’s housing market.
To show the depths to which housing as sunk, there were 2.07 million units started in 2005.
“Housing starts have been hovering within a tight range for more than two years without substantial movements in either direction. Today’s reading is still in line with the recent dynamic,” said Yelena Shulyatyeva, an economist at BNP Paribas.
In August, a measure of home-building sentiment for new single-family homes remained mired near lows, with a reading of just 15 on a scale where readings over 50 are considered “good,” according to a survey released Monday by the National Association of Home Builders. See story on builder survey.
Even so, the data released Tuesday do show improvement from last year: Starts have climbed from 9.8% from July 2010 levels, and permits have gained 3.8%.
Elsewhere, the Labor Department reported import prices gained 0.3% in July, after a decline of 0.6% in June.
The Federal Reserve said industrial production rose 0.9% in July and upwardly revised data from May and June.
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