WASHINGTON U.S. builders started work in August on the most single-family homes in six months and requested permits to build even more in future months. The figures suggest housing remains are driver of economic growth despite higher mortgage rates.
The Commerce Department says builders increased construction of single-family homes 7 percent to a seasonally adjusted annual rate of 628,000. That was the most since February. And they sought 627,000 permits for them, a 3 percent increase from July and the most since May 2008.
Overall, builders broke ground on 891,000 houses and apartments last month, up from 883,000 the previous month. The gain in single-family homes was offset by a decline in volatile demand for apartments.
Permits fell to 918,000 from 954,000 in July, also because of a decline in apartments.
Patrick Newport and Stephanie Karol, economists at IHS Global Insight, said any evaluation of this report should emphasize housing starts because they are "better measured, less affected by weather and are forward looking. "
"Housing starts disappointed. Given the role that weather likely played in suppressing starts in June and July--June 2013 was the 13th wettest June on record, while July was the 5th wettest--a strong August bounce back in housing starts appeared a shoo-in. Instead, housing starts increased only 0.9%. Making matters worse, July's estimates were revised down to an 883,000 rate (from 896,000)."
At the same time, they noted two positive forces at work: Improved builder sentiment rose in August as measured by the National Association of Homebuilders , and the Census Bureau's poverty and income report yesterday that showed the number of households increased by 1.375 million in the year ended March 2013.
"So, should we be concerned about the new construction market? Concerned, yes, but not too concerned yet. "