Multifamily housing starts, a more volatile measure that includes properties such as condominiums and small apartment buildings, pulled overall housing starts down 1% in July from a month earlier to a seasonally adjusted 581,000 annual rate, the Commerce Department said Tuesday. That compares with a 6.5% increase in June.
Construction of single-family homes, though, rose 1.7%, to 490,000, in July after climbing 17.8% in June. Single-family permits, a sign of future construction, rose 5.8%. The rise in construction marked the fifth consecutive monthly gain, showing once again that the housing market is firming up, albeit at a slow pace.
While many economists agree the market already has hit bottom, housing-sector growth may not be a contributor to gross domestic product until next year because it is rebounding from such an extreme low. Singe-family starts are still 73% below their December 2005 peak.
"You don't want to lose sight of the fact that these are extremely depressed levels," said Wells Fargo Securities economist Adam G. York. "It's not necessarily time to break out the champagne and celebrate the boom of a returning housing market."
As the last paragraph notes, we're at extremely depressed levels. Here is a chart that shows those levels:
From the bigger picture, this is good news. I'm still reluctant to say the free fall is over, but five months of increases is a good development. In addition, it indicates we have a trend in place -- and a good trend at that.