Economy Watch: Housing Starts Up in July; Consumers Grumpier in August
- Aug 19, 2013
Housing starts continued their upward trajectory in July, with private starts coming in at an annualized rate 896,000 units, a 5.9 percent increase compared with June, the Census Bureau reported on Friday. The total is also up 20.9 percent compared with July 2012.
All of the monthly increase was due to multi-family starts, since at an annualized 591,000 units, single-family home starts were 2.2 percent lower in July than June. Multi-family starts, which tend to be jumpy, were up more than 25 percent for the month. Still, on an annual basis, single-family home starts were up 15.4 percent in July, according to the Census Bureau, with multi-family starts up more than 33 percent for the year.
Building permits, a more forward-looking indicator of housing activity, exhibited the same pattern in July as starts did. Privately owned housing units authorized by building permits in July were at an annualized rate of 943,000, for a gain of 2.7 percent compared with June. Single-family permitting was down 1.9 percent for the month, while multi-family permitting was up 13.5 percent.
Consumers Grumpier in August
Preliminary consumer sentiment for August took a dip compared with the end of July, according to Reuters/University of Michigan on Friday. The sentiment index dropped from a final reading in July of 85.1 to a mid-August reading of 80, which is the lowest level since April, and lower than expected.
The current conditions component dragged the index down, dropping 7.6 points to 91, its lowest reading since April. It isn’t clear what’s bothering consumers this time, since the housing market is generally acknowledged to be a recovery mode, gas prices haven’t spiked in recent weeks, and the employment picture isn’t getting any worse. The expectations component also dropped, down 3.6 points to 72.9, which is the lowest reading for that component since April.
Moreover, consumer sentiment is still historically low. During the Reagan-era prosperity, the index tended to be in the 90s, while during the Clinton-era prosperity, it often broke 100 and even 110. During the most recent recession, the index dropped precipitously, and only recently has risen over 80 once more. The last time sentiment was that glum was during the malaise of the late 1970s and early ’80s.
Wall Street was also a bit more grumpy on Friday, with the Dow Jones Industrial Average dropping 30.72 points, or 0.2 percent. The S&P 500 lost 0.33 percent and the Nasdaq was off 0.09 percent.