Housing Starts Edge Down; Beige Book Says Modest Growth

Housing starts came in at an annualized rate of 836,000 in June, or 9.9 percent below the May total of 928,000. And according to the Federal Reserve's latest Beige Book, economic growth increased at a “modest to moderate pace” since the previous survey.

The Census Bureau reported on Wednesday that housing starts came in at an annualized rate of 836,000 in June, or 9.9 percent below the May total of 928,000. That’s because of a downswing of 26.7 percent in apartment construction—which tends to wobble around from month to month—but also because single-family starts were down a bit. Single-family housing starts in June were at an annualized rate of 591,000, or 0.8 percent below May.

Compared with last year, however, starts are still ahead of the game. For all types of housing, the annualized rate in June 2013 was 10.4 percent higher than during the same month a year earlier. For apartments, the year-over-year increase in June was 7.8 percent, and the single-family total was 11.5 percent higher.

Permits, which serve as a forward-looking indicator, were also down 7.5 percent in June, to an annualized rate of 911,000 units. All of that drop was in multi-family permitting, however, which declined by 22.8 percent. Single-family permits eked out a 0.6 percent gain for the month. Compared with last year, housing permits were up 16.1 percent.

Growth Still Modest (or Moderate) Says Beige Book

The Federal Reserve released its latest “Summary of Commentary on Current Economic Conditions by Federal Reserve District”—better known as the Beige Book—on Wednesday. The language was familiar: according to sources reporting from the 12 Federal Reserve districts, U.S. economic growth increased at a “modest to moderate pace” since the previous survey.

In most districts, businesses continued to hire at an increasing pace, or at least held steady. Some places are still cautious or reluctant to hire permanent or full-time staff, though the demand for part-time workers is relatively strong—a trend that mirrors the most recent jobs data. The New York, Richmond, and San Francisco districts reported high demand for technology workers, according to the Beige Book. Overall, the upward pressure on wages is weak, and the upward pressure on prices isn’t much stronger, except perhaps for energy.

In the real estate sector, both sales and construction activity continued to rise in June. “Demand for residential construction grew steadily, as multi-family construction remained strong and single-family construction continued to improve,” the book said. Commercial real estate conditions continued to improve as rents rose slowly and vacancies fell.

Wall Street had a modestly up day, befitting the Beige Book’s sentiment, with the Dow Jones Industrial Average up 18.67 points, or 0.12 percent. The S&P 500 gained 0.28 percent and the Nasdaq advanced 0.32 percent.