Housing Starts Up in August


One of the most important indicators of the housing market has confirmed for another month that the ongoing recovery is still on track despite the recent surge in mortgage rates.

According to the Commerce Department, privately owned housing starts in August were at a seasonally adjusted annual rate of 891,000. This was 0.9% higher than July, and 19% up over the same month last year.

Housing completions were also up by 0.3% compared to July, and by 12.1% over August of 2012.

Slightly more disconcerting was the trend in building permits, which are widely viewed as a leading indicator of both starts and completions. On a sequential basis, they were down by 3.8%, though single-family permits were higher by 3%.

Metric

August 2013

July 2013

Change

Building permits

918,000

954,000

(3.8%)

Housing starts

891,000

883,000

0.9%

Housing completions

769,000

767,000

0.3%

Source: Commerce Department.

The overall direction of housing starts, the most important figure of the three, comes as a particular relief on the heels of the previous month's results. While overall starts improved in July, all of the growth came from the multi-family market. Last month, by comparison, this trend was reversed, with single-family homes leading the way.

The news is largely consistent with what we've seen from homebuilders of late.

In the most recent quarter, for instance, Toll Brothers (NYSE: TOL  ) , the nation's largest luxury homebuilder, reported that total revenues and homebuilding deliveries rose 24% and 10%, respectively. Net signed contracts rose 47% in dollars and 26% in units, and backlog rose 75% in dollars and 56% in units compared to 2012's third quarter.

D.R. Horton (NYSE: DHI  ) , the nation's largest homebuilder by units, said that its net sales orders increased 12% in homes, to 6,822, and 30% in value, to $1.8 billion, and that the number of homes closed increased 30% in homes, to 6,464, and 46% in value, to $1.6 billion.

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