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Housing Production Regains Some Strength in June

Nationwide housing starts rose 14.6 percent to a seasonally adjusted annual rate of 629,000 units in June, according to figures released by the U.S. Commerce Department. This was the best pace of housing production since the beginning of the year, and was attributable to significant gains registered in both the single-family and multifamily segments as well as every region of the country.

"These numbers are an encouraging sign that builders are responding to improving consumer interest in new homes and apartments by gradually replenishing their extremely thin inventories in places where demand is evident," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "That said, the lack of access to construction credit remains an impediment to starting new projects and getting building crews back to work in markets that are improving."

"The latest housing production figures show broad-based gains on both the single-family side and in multifamily apartment construction, where we know that demand has been increasing due to the influx of renters in the market," said NAHB Chief Economist David Crowe. "Going forward, we expect to see a gradual upward trend in new-home production through the end of this year as consumers begin taking advantage of the buyers' market, though not without some bumps along the way."

Single-family housing starts posted a 9.4 percent gain to a seasonally adjusted annual rate of 453,000 units in June, their best pace since November 2010. Meanwhile, multifamily starts, which tend to display greater volatility on a month-to-month basis, gained a dramatic 30.4 percent to a rate of 176,000 units – their best pace since January.

Starts activity improved across every region of the country in June, with the Northeast posting a 35.1 percent gain, the Midwest posting a 25.3 percent gain, the South posting a 10.6 percent gain, and the West posting a 5.4 percent gain.

Issuance of building permits, which can be an indicator of future building activity, also improved in June. Overall permits posted a 2.5 percent gain to 624,000 units, their highest level since December 2010. Single-family permit issuance held virtually even with the previous month, with a 0.2 percent gain to 407,000 units. Multifamily permits gained 6.9 percent to 217,000 units – their highest level since October 2008.

Permits were up in three out of four regions in June. The Northeast was the only part of the country to report a decline, of 10 percent, while the Midwest registered a 5.2 percent gain, the South posted a 5.5 percent gain, and the West posted a 1.4 percent improvement.