Construction of US homes falls 11% in July

19 August 2008 14:34  [Source: ICIS news]

WASHINGTON (ICIS news)--US new home construction resumed its downward trend in July with housing starts off 11% and building permits declining nearly 18% from June, the Commerce Department said on Tuesday.

 

The department said that housing starts in July were at a seasonally adjusted annual rate of 965,000 units, down 11% from the revised June rate of 1.084m and nearly 30% below the July 2007 home construction pace of 1.371m units.

 

The continuing decline in housing construction and the even sharper drop in building permits suggest that the sector may fall still further before finding bottom.

 

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and chemicals-based products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

 

New home construction had shown a rare increase in June, but that small gain is attributed to a one-time surge in multi-family apartment building projects and did not reflect an advance in the much larger single-family home building segment that is important for chemicals consumption.  

  

Building permits, which are issued by local governments when contractors are ready to begin work on a project, were at a seasonally adjusted annual rate of 937,000 in July, the department said, down 17.7% from June’s revised rate of 1.138m permits. 

 

The pace of building permits granted by local governments in July was also 32.4% below the revised figure of 1.386m authorisations in July 2007, it added.

 

US new home construction in July could not have been influenced by the recently enacted federal stimulus bill that provides economic incentives for home purchases; that law took effect on 31 July.

 

That measure, the Housing and Economy Recovery Act, provides a $7,500 tax break to first-time home buyers, and home builders hope that some impact of that incentive will show in the August housing figures that will be released on 17 September.

 

US Housing Starts

 

	July ‘08	June ‘08	June-July ‘08	July ‘07	July ’07 to July ‘08
US Housing Starts	.965m*	1.084m*	-11%	1.371m*	-29.6%

* Seasonally adjusted & annualised

 

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By: Joe Kamalick
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