WASHINGTON (AP) — U.S. builders broke ground on slightly fewer homes in July than June. But in a hopeful sign for future construction, applications for building permits rose to their highest level since August 2008.
The Commerce Department said Thursday that single-family homes and apartments started in July dipped 1.1 percent to a seasonally adjusted annual rate of 746,000. That's down from June's rate of 754,000, the fastest since October 2008.
The weakness in July came from a 6.5 percent drop in the building of single-family homes, which represent about 70 percent of the market. They fell to an annual rate of 502,000, down from a two-year high reached in June. By contrast, construction of apartments rose 12.4 percent to an annual rate of 244,000 units.
But applications for building permits rose 6.8 percent to a seasonally adjusted annual rate of 812,000.
"Given the strong increase in permits, the likelihood is that builders will be digging a lot more homes in the months to come," said Joel Naroff, chief economist at Naroff Economic Advisors. He said that developers are only taking out permits "if they expect to put a shovel into the ground in the immediate future."
For July, total home construction rose in the Midwest but fell in all other parts of the country.
Even with the gains made this year, the rate of construction and the level of permits remain only about half the 1.5 million annual rate considered healthy.
Economists cautioned that housing is still a long way from where it should be.
"The housing market is getting better, but it is taking a long time," said Patrick Newport, an economist at IHS Global Insight. He said that he was forecasting housing starts would be 761,000 for all of 2012. That would be a 25 percent increase from 2011.
The housing boom drove construction to record levels in the middle of last decade, peaking in January 2006 at a rate of nearly 2.3 million. But the bubble burst in late 2006 and 2007, and construction ceased in most parts of the country. Starts plunged to just 478,000 homes in April 2009, the low point during the housing bust.