July saw disappointing declines in permits, starts, and completions of new single-family homes, according to the latest “New Residential Construction Report” released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development, marking the fourth straight month of deterioration.
Building permits for privately owned housing units fell 3.1 percent in July to a seasonally adjusted annual rate of 565,000, 3.7 percent below the same period last year. A 1.2 percent decline in permits for single-family units since June brought the rate to 416,000 in July, and permits for residences in buildings of five or more units dropped 9.2 percent.
Overall housing starts increased by 1.7 percent in July to a rate of 546,000, propped up by a 17.3 percent jump in starts of homes in buildings of five or more units. However, single-family starts fell 4.2 percent to 432,000—13.6 percent below the rate in July 2009.
Completions dropped dramatically across the board in July, with overall completions falling 32.8 percent from June to a rate of 587,000. A 27.5 percent decline in single-family completions brought the rate to 490,000 in July, which is only 1.4 percent below the previous year’s rate. Construction of units in buildings of five or more units saw even more serious setbacks, with completions for this category plummeting 52.1 percent since June—67.1 percent fewer completions than in July 2009.
June’s significant increase in completions for all housing types—particularly in the single-family category, which had increased 31.3 percent from May—was most likely due to builders working to beat the deadline for the first-time homebuyer tax credit. Much of the year’s new-home sales were front-loaded to the spring, with housing permits and starts both peaking in April. Although troublesome, July’s sharp declines in housing permits, starts, and completions are not terribly surprising considering the expiration of the tax credit and the passing of the deadline.
The American Institute of Architects’ (AIA) July Architecture Billings Index (ABI) showed slight improvements over June, increasing by nearly two points to a score of 47.9. However, demand for design services is still low, and the ABI’s recent scores reflect the continuing volatility of the nation’s economic recovery.
Since April, the ABI has fluctuated up and down, falling in May from 48.5 to 45.8 and then improving by an almost negligible 0.2 points in June. July’s 1.9-point improvement is welcome, but it is unlikely demand will increase above a score of 50—indicating an increase in demand for design services—anytime soon. New projects inquiries fell from 57.7 to 53.1 in July.
