The Commerce Department reported Tuesday that building permits for new home construction tanked fell 16.3 percent in July to a 1.12 million-unit pace. However, housing starts rose to a near eight-year high in July fueled by an increase in single-family homes.
Groundbreaking increased 0.2 percent to a seasonally adjusted annual pace of 1.21 million units, the highest level since October 2007. June’s report revised starts much higher to a 1.20 million-unit rate, up from the previously reported 1.17 million-unit pace.
Economists polled by Reuters had forecast groundbreaking on new homes rising to a 1.19 million-unit pace last month, and housing starts have now been above a one million-unit pace for four straight months.
In July, groundbreaking for single-family homes, which accounts for the largest share of the market, shot up 12.8 percent to a 782,000 unit pace, which is the highest level since December 2007. Single-family home building in the South, where most of the home construction takes place, rose to the highest level since January 2008.
Starts in the Northeast tumbled 27.5 percent after being boosted in recent months as builders took advantage of tax incentives that expired in mid-June. However, single-family starts in the Northeast rose to the highest level since October 2013.
Starts for the volatile multifamily segment fell 17 percent to a 424,000,000 unit rate.
Meanwhile, the decline in building permits followed a report on Monday that showed confidence among homebuilders climbed to a near 10-year high in August. Single-family building permits slipped 1.9 percent in July. Multi-family building permits tumbled 31.8 percent.