New home construction workers. (Photo: Reuters)
The Commerce Department said on Tuesday housing starts came in at an annual rate of 1.211 million in July, topping the estimate for 1.180 million. The 2.1% increase in groundbreaking was the highest level since February.
However, building permits, which are a sign of future activity, came in at 1.152 million, missing the median forecast for 1.160 million. Further, investment in residential construction contracted in the second quarter for the first time in more than two years.
Nevertheless, new housing starts for single-family homes, which is the largest contributor in the housing market, rose 0.5% to a 770,000-unit pace in July. That’s also the highest level since February, though they tumbled 23.9% in the Northeast and declined 2.6% in the Midwest.
Building permits for single-family homes fell 3.7% last month to a 711,000-unit rate, the lowest level since September 2015, while multi-family building permits rose 6.3 percent to a 441,000-unit pace.
Meanwhile, new housing starts for the multi-family component gained 5.0% to a 441,000-unit pace. Groundbreaking on multi-family housing projects with five units or more jumped to the highest level since September 2015, though it is the more volatile segment.
