US home construction heats up in July
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WASHINGTON (MarketWatch) - Construction on new U.S. homes jumped 15.7% in July to reach the highest level in eight months, offering another piece of evidence that the housing market is recovering after an early-year lull.
Housing starts climbed to an annual rate of 1.09 million last month from 945,000 in June, the Commerce Department said Tuesday. What's more, the decline in new construction in June was much smaller than previously reported.
Initially, the government had reported a 9.3% decline in starts in June, but revised figures show just a 3.9% drop. At the time, the report stoked concerns that the housing market might be weakening.
The housing starts report is notorious volatile and often subject to large changes.
Still, the rebound in construction in July surpassed Wall Street estimates. Economists surveyed by MarketWatch had expected starts to climb to a seasonally adjusted 975,000.
Work on new single-family homes, which account for three-quarters of the housing market, increased 8.3% to a 656,000 annual rate. That's the highest level since December.
Construction of multi-family units of five or more, meanwhile, climbed an even sharper 33% to 423,000, reaching the highest level since January 2006.
In another good sign, permits for new construction also rose sharply. They increased 8.1% to an annual rate of 1.05 million from 973,000 in June. Permits reflect how many new homes that companies plan to build in the near future.
Permits for single-family homes edged up 0.9% to an annual rate of 640,000 in July. That's the highest level since November. And permits for multi-family units of five or more - many of them likely to become rental properties - surged 23.6% to 382,000. Also read: America's recession-torn construction belt
Americans are renting more in part because they cannot afford to buy new homes, a reminder that the U.S. economy is still not fully healed after the deep recession of 2007-2009. In a normal economy, the U.S. should be building about 1.7 million new homes a year, economists estimate.
New construction rose in all regions except the Midwest, where they fell almost 25%. Housing starts jumped 44% in the Northeast, 29% in the South and 18.6% in the West.
In ordinary times, a strong housing market is a big benefit to the economy. Large amounts of raw materials and finished goods are required to build homes and furnish them after sale. The construction trade also directly employs more than 6 million workers.
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