Housing starts fall 1.5% in July
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Implications: Housing starts came in at a 604,000 annual pace in July, slightly beating consensus expectations.  While this was lower than last month, the level of starts remains far above levels we saw earlier this year, supporting our view from a few months ago that the dip in home building in the Spring was due to the unusually harsh tornado season. The decline in July was due to single-family starts, which fell 4.9%.  In the volatile multi-family sector (which has been trending higher since late 2009), starts rose 7.8%.  After rising last month, the total number of homes under construction fell again – to the lowest level on record (since at least 1970).  This decline was largely due to the fact that building completions rose 11.8%, to the highest level in over a year.  We should see a shift again next month to fewer completions and rising starts as the housing market slowly recovers.  Based on population growth and "scrappage" rates, home building must increase substantially to avoid shortages in some regions of the country and with the ongoing shift toward renting rather than owning, growth in multi-family construction should continue to outpace the growth in single-family units.  In other news this morning, import prices rose 0.3% in July.  Overall import prices are up 14% in the past year and up 5.5% excluding oil.  Export prices declined 0.4% in July but are up 9.8% in the past year.  Ex-agriculture, export prices rose 0.2% in July and are up 8.3% in the past year, the largest increase on record (dating back to the mid-1980s).

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Posted on Tuesday, August 16, 2011 @ 10:40 AM

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