Housing Starts Climb Again

Housing Starts Climb Again

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

A key report that reflects the strength of the housing market is the monthly housing starts report released jointly by the U.S. Census Bureau, U.S. Department of Commerce and U.S. Department of Housing & Urban Development.  The housing starts report includes two pieces of data: starts and permits.  A housing start is counted when construction begins on a new single or multifamily property.  A permit is counted when a permit is issued by a local government to a property owner or builder to begin construction on a new single or multi-family property. Because construction typically begins soon after a new permit is issued, housing starts and permits are typically highly correlated.  The housing starts report, issued on a monthly basis, includes statistics for the prior month.

The housing starts report for July showed continued strength in the housing construction market with a particularly positive showing in the multi-family segment of the market.  The report is a positive sign for home buyers and borrowers as it suggests more inventory should be hitting the market the second half of 2015.  The July figures continue a positive trend following strong June and record-breaking May reports.

June housing permits increased 7.4% to 1.343 million annualized units, following a 11.8% increase in May.  The permit figure significantly exceeded the high end of analyst expectations by almost 80,000 units.  Multi-family permits increased 15.3% while single family permits increased 0.9%.

Housing starts also showed strength, increasing 9.8% to 1.174 million annualized units in June after dropping 11.1% in May.  The housing starts figure came in at the top end of industry analyst expectations.  Multi-family permits skyrocketed 29.4% while single family permits decreased 0.9%.  (Source: Bloomberg)

What it Means for Mortgage Borrowers

The housing starts report has strung together three consecutive months of positive results as home builders respond to increased demand from home buyers and appreciating property values.  In a positive for home buyers, the increase in supply forecast by these reports should help offset upward pressure on housing prices.  The big jump in both multi-family permits and starts, however, means that a significant chunk of the new inventory will address the rental market.  If you are weighing renting versus buying, use our Buy Versus Rent Comparison Calculator to understand the financial trade-offs between the two and check out our Rent Payment Mortgage Affordability Calculator to review how a rent payment equates to a mortgage amount.

The FREEandCLEAR Mortgage Expert


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About the author
Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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