More homes started by builders in July
WASHINGTON — Developers broke ground on homes at a faster pace in July. But the rise was all a result of apartment construction, which is typically volatile. By contrast, builders began work on fewer single-family homes — the bulk of the market — and sought fewer permits to build them.
The report from the Commerce Department suggests that homebuilding is maintaining its recovery but might be starting to be restrained by higher mortgage rates.
Builders began work on houses and apartments at a seasonally adjusted annual rate of 896,000 in July, the department said. That was up 6 percent from June, though below a recent peak of more than 1 million in March. Construction began on 26 percent more apartments but declined 2.2 percent for single-family houses.
Other measures of the housing market have flattened or declined. It may signal that higher loan rates have begun to weigh on housing, which has otherwise steadily recovered since earlier last year.
Mortgage applications by potential homebuyers have fallen 15 percent since the end of April. Signed contracts to buy homes slipped in June after reaching a six-year high in May.
The average rate on the 30-year loan was 4.4 percent this week — a full percentage point higher than in early May. Mortgage rates spiked in June after Chairman Ben Bernanke indicated that the Federal Reserve could slow its bond purchases this year. The bond purchases have kept long-term interest rates low, encouraging more borrowing and spending.
“There's no doubt that rising rates have had an effect,” said Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage.
Some smaller homebuilders have said it's become more difficult for them to get loans to build. They also say that limited supplies of finished lots and a lack of skilled workers have become barriers to faster construction.
Last month, D.R. Horton Inc., the nation's largest homebuilder, said its sales pace declined in May, when rates began to move up.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.