Housing starts surged in July to the highest level in eight months, underscoring the recent pickup in builder optimism and showing more traction in the residential real estate market.
Beginning home construction climbed 15.7% to a 1.09 million annualized rate following June’s 945,000 pace, which was stronger than previously reported, the Commerce Department reported.
The level exceeded the highest estimate in a Bloomberg News survey of economists, whose median projection called for 965,000 starts.
A strengthening job market and cheaper borrowing costs are helping revive residential real-estate after a lull in construction at the start of the year. At the same time, the industry’s recovery has been challenged slow wage growth and tight credit, which have put homeownership out of reach for some Americans.
“The long-term recovery has good fundamental footing behind it,” Tom Simons, an economist at Jefferies said. “There’s definitely some demand still to come after periods of depressed sales.”
Permits for future projects advanced 8.1% to a 1.05 million pace. The gain reflected the fastest rate of building applications for single-family dwellings since November.
Estimates for annualized starts ranged from 898,000 to 1.03 million after a previously reported 893,000 in June, according to the Bloomberg survey of 75 economists. The pace of starts averaged 930,000 last year. Applications for building permits were projected to advance to a 1 million rate.
Starts of single-family properties rose 8.3% to a 656,000 rate in July, the fastest this year, the Commerce Department said. Construction of multifamily projects such as condominiums and apartments rose 28.9% to an annual rate of 437,000.
Three of four regions showed an increase in groundbreaking last month, led by a 44% jump in the Northeast to the highest level since July 2008. Starts rebounded 29% in the South and climbed 18.6% in the West.
Weather dealt a setback to builders at the beginning of the year as snow blanketed construction sites in parts of the country and bitter cold kept some would-be buyers at home.
Homebuilding bounced back in the second quarter, climbing at a 7.5% annualized rate in the second quarter after a 5% slump in the first three months of the year, data from the Commerce Department showed on July 30.