Home building took off in July as builders broke ground on new homes at their fastest pace of the year.
Housing starts rose 15.7% from June to a seasonally adjusted annual rate of 1.1 million, the Census Bureau said Tuesday. The previous estimate for June also was revised up by 52,000 to 945,000.
July's starts solidly beat economists' median forecast of 965,000 and was the strongest rate since November. Last month's pace came in slightly ahead of April's 1.06 million rate, the only other month this year when starts' annual rate cracked the 1 million mark.
Single-family home building also increased to a seasonally adjusted annual rate of 656,000 — also the fastest pace this year.
Meanwhile, building permits, a sign of future construction plans, were issued at a 1.1 million annual rate, the fifth month this year that new permits have exceeded 1 million in a month. Last year, permits averaged 990,000 a month.
Despite the improvement in July, housing is still well behind its pace in the years preceding the housing bust. From 2000 through 2005, monthly housing starts averaged a 1.8 million annual rate and the rate of single-family home building was 1.5 million, according to Census data from Haver Analytics.
While housing starts are running ahead of last year, much of the growth has been in construction of apartment buildings, rather than single-family homes. Through July, housing starts overall this year are up about 9% from last year's first seven months but construction of single-family homes is only up about 3%.
Home builders say that market has been held back by a still-tight lending climate for residential mortgage borrowers and shortages of finished lots and labor.
Even so, builders' confidence in the market for single-family home building rose this month to its highest level since January, according to the National Association of Home Builders/Wells Fargo Housing Market Index. It was the third consecutive monthly gain in the index, the NAHB reported Monday.