Date: August 16, 2010
United States New Residential Construction, July 2010 Results
Source: Joint Release from the United States Census Bureau and the United States Department of Housing and Urban Development
Link to Release: http://www.census.gov/const/newresconst.pdf
Summary: U.S. Housing starts rose to 546,000 units in July, a 1.7 per cent increase from the downwardly revised annual rate of 537,000 units recorded in June. The increase came entirely from within the volatile multiple family category, which rose 17.3 per cent to an annual rate of 95,000 units. Singlefamily starts, a more reliable indicator of the underlying health of the market, fell 4.2 per cent in July to an annual rate of 432,000 units. The annual rate of building permits, which signal future activity, dropped 3.1 per cent to the lowest level of the year. On an unadjusted basis, total starts were also down almost ten per cent annually.
Analysis: The level of residential home construction has been “flat-lining” since the latter half of 2009, and July building permit data does not point to stronger growth in the fall. A key issue adversely affecting the demand for new homes is the state of the US resale housing market. Because distressed sales account for more than a third of existing home inventory, many home buyers are taking advantage of value that cannot be found at new home sales centres. The value represented by distressed listings coupled with fact that the resale market remains well supplied explains why a small number of households, from a historic perspective, are spilling into the new home market. The US construction sector has strong economic linkages to other sectors of the economy, both in the US and Canada. For Canada in particular, the US construction lull adversely affects the export of raw materials and manufactured goods and the associated creation of well paying jobs.
Source: Toronto Real Estate Board
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