Markets: News  

July U.S. housing starts retreat after strong June

WASHINGTON (MarketWatch) -- After hitting the highest level of activity seen in nearly four years in the prior month, construction of new houses retreated in July, the Commerce Department estimated Thursday.

Starts fell 1.1% in July to an annualized rate of 746,000 units. Starts had jumped a revised 6.8% in June to a 754,000 rate, the highest since October 2008.

Economists surveyed by MarketWatch had been looking for a stronger report, with starts forecast to rise to a 765,000 rate.

Overall, analysts are expressing optimism about the nation's housing market and with it, prospects for the economy.

"The housing market is continuing to heal and should be a major part of growth in the quarters ahead," wrote Joel Naroff, president of Naroff Economic Advisors.

In the past year, starts are up 21.5%. Starts of single-family homes are up 17.0%.

Meanwhile, building permits increased 6.8% to a seasonally adjusted annual rate of 812,000 in July. This is the highest level since August 2008.

According to the government, a building permit results in a new housing start roughly within one month.

Building permits for single-family homes rose 4.5% to a 513,000 rate in July. Many economists consider single-family permits to be the most important number in the government's release.

"Strength in housing permits reinforces the perception that the rebound in housing shows resilience," said Eric Green, hear of interest-rate research at TD Securities.

The decline in starts for July was due to fewer starts of new single-family homes.

Starts of new single-family homes fell by 6.5% to a 502,000 rate in July. This follows a 4.7% increase to a 537,000 rate in June.

By contrast, starts of large apartment units rose 12.4% to a 244,000 rate in July, mirroring a 12.4% gain in the prior month.

On Wednesday, the National Association of Home Builders/Wells Fargo builder sentiment index rose to 37 in August from a July reading of 35. It marked the highest reading since March 2007.

In a separate U.S. economic report out Thursday, the Labor Department said initial jobless claims rose slightly last week. Read more.

Wall Street took Thursday's data in stride, with stock-index futures suggesting modest gains at the 9:30 Eastern open. Read more in Indications.