After Irene, Housing Starts Fall 5% from July

Fewer-than-expected housing starts fell in line Tuesday with dismal forecasts threatening a global economic slowdown, with the ""Commerce Department"":http://www.commerce.gov/ and ""HUD"":http://portal.hud.gov/portal/page/portal/HUD jointly revealing a 5-percent slide back for single-family home construction over August. Market watchers slapped severe weather with the blame for a slump in new home starts across New England, while a nudge up in building starts framed the dark recession cloud with a silver lining.

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According to the figures, housing starts plunged to a seasonally adjusted annual rate of 571,000 over August, reflecting a drop from the 601,000 estimate drawn together in July ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and a 7.8-percent decline from the same numbers offered up in August last year.

Speaking with _MReport_, Celia Chen, senior research director and housing specialist with ""Moody's Analytics Inc."":http://www.moodysanalytics.com/, chalks up the unexpected shortfall to blustery Hurricane Irene, which wracked states from North Carolina to Vermont.

""Top-line measures of homebuilding disappointed with their August slide, but hurricanes and tropical storms are behind the slide,"" she wrote in a release Tuesday.

Some positive news: ""[T]otal permit issuance has increased year over year in each of the last four months and the gains are solid, in the mid-single digits,"" she added.

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""This string of gains is the longest since the beginning of 2010, when builders were putting up homes in anticipation of the first-time homebuyer tax credit,"" she wrote.

Completions for housing starts descended to a seasonally adjusted annual rate of 623,000, down from July revisions that placed figures at an approximate 640,000, still above August 2010.

Building permit issuance leapt up to a seasonally adjusted annual rate of 620,000, 3.2 percent above rises in housing stock for July and nearly 8 percent above the annual rate recorded in August last year.

""At this point, most builders are only looking to replenish their depleted inventories of new homes for sale, but otherwise holding off on new projects,"" Bob Nielsen, a Reno-based homebuilder and ""National Association of Home Builders"":http://www.nahb.org/default.aspx chairman, said in a ""statement"":http://www.nahb.org/news_details.aspx?sectionID=122&newsID=13493.

""While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production,"" he added.

Chen portrays the future of housing starts as one led by multifamily rentals.

""[T]he struggling national recovery will keep homebuilding weak until mid-2012 when better job and income growth boosts demand and a very small inventory of new homes induces more construction,"" she wrote, adding that ""apartment building will outperform single-family construction"" over the same period.

Still, she says, ""the main positive for the homebuilding outlook is the dearth of new-home inventory, which keeps descending to new historic lows.

""Rebuilding after the storms will also boost construction a little in [the] coming months,"" she wrote.