Building Permits
Increased in June
by Jeff Bater
From The Wall Street Journal Online
July 20, 2005
Housing starts didn't budge during June as construction rebounded in the South while dropping in the rest of the nation, but permits for future groundbreakings climbed as low mortgage rates enticed buyers.
The Commerce Department said Tuesday that housing starts were unchanged at a seasonally adjusted 2.004 million annual rate last month. Permits for future building rose by 2.4% in June to a 2.111 million annual rate after falling a revised 4% in May.
"We have to settle for housing demand that is torrid rather than scalding," RBS Greenwich Capital Markets economist Stephen Stanley said in prepared analysis. "The bottom line is that the housing sector is still extremely strong."
Low financing costs and concern that lending rates might escalate later this year are driving home-buying. According to Freddie Mac, the average rate on a 30-year fixed mortgage in June was 5.58%, the lowest monthly level since March 2004's 5.45%. Rates have stayed low despite a year-long campaign by the Federal Reserve to increase short-term borrowing costs.
The latest available government data show new-home sales rose 2.1% to a 1.271 million annual rate during May. The ratio of houses for sale to houses sold was 4.2. With supplies lean and demand hot, prices for houses in the U.S. have been rising, averaging $281,400 in May -- 8.2% above May 2004's $206,400.
With demand still high, homebuilders remain optimistic about the housing market. The National Association of Home Builders' index for sales of new, single-family homes fell to 70 in July from a revised 72 in June. When the index exceeds 50, the number of builders surveyed who expect good sales outnumber those who expect poor sales.
Regionally, home construction last month rose 11.4% to 1,003,000 in the South after dropping 11.9% in May. Construction fell 0.5% to 185,000 in the Northeast, 12.1% to 335,000 in the Midwest, and 10.4% to 481,000 in the West.
Single-family housing starts fell 2.5% in June to 1.667 million. Starts of housing with two or more units increased 14.2% to 337,000 units; construction of homes with five or more units climbed 16.2% to 302,000 units.
Nationwide, an estimated 186,200 houses were actually started in June based on figures unadjusted for seasonal factors. An estimated 205,400 building permits were issued last month, also based on unadjusted figures.
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