WASHINGTON (8/19/13)--Construction of new U.S. homes increased in July--buoyed by a rebound in multifamily (apartment) projects that trumped a slowdown in single-family properties. However, the increase was still less than expected (The New York Times, Bloomberg.com and The Wall Street Journal Aug. 16).
Housing starts rose 5.9% last month to a seasonally adjusted rate of 896,000 units, following an 846,000-unit pace in June, the Commerce Department said Friday. Economists had predicted a 900,000 pace for July, according to a Reuters poll.
Also, permits for future home construction climbed 2.7% to a 943,000-unit pace, the department added. Economists had forecast a 945,000 unit pace, the Reuters poll indicated.
Although there still is a high level of housing affordability and it has not changed significantly historically, fundamentals are not as promising to new buyers as they were in the past few months, Michael Hanson, senior economist with Bank of America Merrill Lynch in New York, told the Times.
A recent increase in mortgage rates has thwarted some of the momentum in the housing recovery--and that was not unexpected, Hanson added.
NEW YORK (8/19/13)--With Americans confronting escalating interest rates and slowing economic growth, U.S. consumer confidence unexpectedly dropped in August from a six-year high, according to the Thomson Reuters/University of Michigan Confidence Index (The New York Times, Bloomberg.com and Moody's Economy.com Aug. 16).
The index fell to 80 from 85.1 in July--the highest reading since July 2007. Economists had forecast an August reading of 85.2, according to a Bloomberg survey.
Rising mortgage rates could take the steam out of housing-market momentum that has added to economic growth nationwide, Bloomberg said.
However, rising personal wealth connected to stock portfolios and home values are helping to mitigate the effects of federal government budget cuts and higher payroll taxes instituted earlier in 2013, said Bloomberg.
Although the slightly rising mortgage interest rates never help the housing market, there remains a backdrop of what appears to be an ongoing improvement in the housing market, Bloomberg added.