Housing starts decline in August, but permits rise

The U.S. Commerce Department recently reported that nationwide housing starts declined 5 percent in August, as single family home production dropped 1.4 percent. In addition, the National Association of Home Builders reported permits for new construction showed modest gains in the month.

The data showed building permits rose 3.2 percent in August, the highest level since December 2010. Single family permits gained 2.5 percent for the month, while multifamily permits increased 4.5 percent. Single family home starts declined 1.4 percent, as multifamily starts dropped 13.5 percent.

Bob Nielsen, the chairman of NAHB, said home builders are trying to replenish their depleted inventory of new homes and are not looking to start new projects.

"While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production," Nielsen said.

In an interview with Bloomberg, Celia Chen, housing economist at Moody's Analytics, said bad weather in August may have put off many housing starts, yet permits rose so that could be a sign of hope. But Chen believes that while the housing market does not seem to be getting any worse, there are no real signs of a turnaround in the near future.

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