Home Construction Rises Again in August
New home construction spiked by 10.5 percent in August, according to a Tuesday report from the Commerce Department, though the majority of the new activity came in the volatile apartment building sector. Construction, as well as housing sales, have sagged in recent months following the April 30th expiration of federal tax credits for homebuyers. The report also showed that new applications for building permits were also up in August, almost 2 percent from July.
August housing starts came in at a seasonally adjusted annual rate of 598,000, the second month in a row with an increased pace. The report puts housing starts at a level 2.2 percent higher than the rate reported last August. The majority of the increase came from new buildings consisting of five or more separate units. Single-family starts came in at a rate of 438,000 units, or a 4.3 percent increase from July. Economists note that even with the second consecutive jump in starts, we are still 12 percent off of the 679,000 unit pace reported in April, at the height of the buying frenzy influenced by the tax credits.
Sales of existing homes have also fallen off since the expiration of the credits; a report for August sales of previously owned homes from the National Association of Realtors is due Wednesday. One economist remarked that the spike in construction is an indicator that sales levels should begin to rise.