Construction of New U.S. Homes Declines on Plunge in South
Source: Bloomberg
By Victoria Stilwell Jul 17, 2014 1:21 PM ET
Housing starts unexpectedly declined in June to a nine-month low, led by a record plunge in the South that shows the construction industry must still overcome hurdles before it can contribute more strongly to U.S. economic growth.
Work began on 893,000 homes at an annualized rate, down 9.3 percent from a 985,000 pace in May that was weaker than previously estimated, according to figures from the Commerce Department issued today in Washington. Other reports showed manufacturing was gaining steam this month and fewer Americans filed claims for jobless benefits last week as consumer sentiment hovered near this year’s high.
A shortage of buildable lots and experienced construction workers, higher prices and mortgage rates that have climbed from record lows mean residential real estate will struggle to help the world’s largest economy. The figures, along with a decline in building permits, corroborate Federal Reserve Chair Janet Yellen’s view that progress in the housing market has been “disappointing.”
“Something that was anticipated to be a big recovery in the spring just has turned out not to be,” said Jay Morelock, an economist at FTN Financial in New York whose starts estimate was among the lowest in the Bloomberg survey. “We see more or less a stabilization. I don’t think it’s going to crash and I don’t think it’s going to accelerate.”
Read more: http://www.bloomberg.com/news/2014-07-17/housing-starts-in-u-s-unexpectedly-fall-on-plunge-in-south.html
Builder Optimism SIgnals U.S. Housing Starts Will Rebound
By Jeanna Smialek and Ilan Kolet Jul 17, 2014 1:28 PM ET
There’s a disconnect between builders’ views on the U.S. housing market and how it looks on paper. That may bode well for the industry.
Housing starts fell 9.3 percent to an 893,000 annualized rate in June, the weakest reading in nine months and due to a construction slump in southern states, figures from the Commerce Department showed today in Washington.
At the same time, builders say the outlook for residential real estate is sunny. The National Association of Home Builders/Wells Fargo sentiment index, which leads starts, has broken to the upside -- rising to a six-month high of 53 in July from 49 the prior month. Readings greater than 50 signal conditions are “good.”
“At face value, the confidence index points to a strong rise in starts from current levels,” Paul Diggle, a property economist at Capital Economics in London, wrote in a research note. Since starts aren’t keeping up with growth in households, it “points to a strong rise in homebuilding,” he said.
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http://www.bloomberg.com/news/2014-07-17/builder-optimism-signals-u-s-housing-starts-will-rebound.html
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