Builders Continue to Rein-In New Housing Production in July

Single-family home builders continued to practice aggressive inventory management in July by slowing the pace of new production nearly 3 percent to a seasonally adjusted annual rate of 641,000 units, according to Commerce Department figures released last week. This was the lowest rate of single-family housing starts since January 1991.

For the second month in a row, overall housing starts and building permit numbers were skewed by a building code change in New York City that caused an unusually large fluctuation in multifamily activity for the Northeast region.

A 23.6 percent decline in multifamily starts to 324,000 units partially offset a 41 percent gain in the previous month, and contributed to an 11 percent decline in total housing starts for July—dropping the seasonally adjusted annual rate to 965,000 units.

Builders also pulled fewer permits for anticipated new-home construction in July, said the Commerce Department. Single-family permits declined 5.2 percent for the month to a 584,000-unit rate, the lowest since August 1982.  Meanwhile, overall permit issuance and multifamily permit issuance, both heavily affected by the New York City data, declined 17.7 percent to 937,000 units and 32.4 percent to 353,000 units, respectively.

Regionally, starts activity was somewhat mixed, with the Midwest posting a 10 percent gain and the South and West each posting 8.2 percent declines, while the Northeast posted a 30.4 percent decline - again due to the New York City numbers. Permit issuance was also mixed on a regional basis, with the Midwest posting a 1.4 percent gain, the South posting a 4.1 percent gain and the West registering a 14.8 percent decline. The Northeast's permits, also affected by New York City data, fell 63.4 percent.

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