Single-family housing starts fell 6.5% in July from the month prior while multifamily starts jumped nearly 10%.
The Census Bureau reported Thursday morning that single-family starts fell to a 502,000 seasonally adjusted annual rate in July from a 537,000 rate in June.
Prior to July, single-family starts moved up four months in a row. Starts have risen 17% from a year ago.
The Wells Fargo Securities Economics Group reported that much of the building is “partially built-out developments where land prices have fallen and new homes can compete with foreclosures in neighboring areas.”
There is also demand for smaller land parcels near key employment centers, but not in the outskirts of major housing markets that are still plagued by foreclosures and depressed house prices.
“The implication is that the upside for single-family construction has a relatively low ceiling at least until jobs and income growth improves and a large proportion of the foreclosure pipeline is cleared,” according to WFS economists.
They expect builders will start construction on 510,000 single-family homes this year, up 18.4% from 2011. In July, construction of multifamily units rose to a 229,000 seasonally adjusted annual rate from a 209,000 rate in June.
Overall, multifamily construction is up 30% from July 2012. “The multifamily sector is a bright spot for new construction,” the WFS report says. “The demand for apartments is expected to remain strong over the next several years.”
