Hopeful Signs for Housing Remain

The housing picture is not so bleak when viewed in the broader context of quarterly averages, which remove much of the noise created by the volatile monthly numbers.

While much of the country is in the middle of the hottest summer in recent memory, residential construction appears to be just entering an early spring - with hopeful signs of more meaningful growth ahead.

At first glance, the June housing starts report appeared to be negative, with activity declining 5 percent to a seasonally adjusted annual rate of 549,000 units, down from a pace of 578,000 units in May. But on closer examination there were some positive signs.

Single-family starts fell a modest 0.7 percent - from 457,000 to 454,000 - suggesting that they are at or near bottom after dropping off with the expiration at the end of April of the home buyer tax credit, which advanced a significant amount of housing demand into that month.

Even multifamily construction, which continues to struggle against forces such as weak rents and the scarcity of financing, provided some basis for optimism. Largely responsible for the drop in total starts in June, multifamily starts fell 21.5 percent to a yearly rate of 95,000, down from May when they were running at a 12-month high of 121,000.

At worst, multifamily construction appears to have found a solid bottom, and more optimistically appears to be on a steady, if erratic, upward course.

NAHB is forecasting that residential construction will slowly improve throughout the second half of this year and into next year, bolstered by continued low mortgage rates, affordable housing prices and an improving jobs market.

- Courtesy of NAHB