Construction of new single family houses and apartment buildings increased a healthy 8 per cent last month, according to figures released yesterday by Commerce Department. But industry economists cautioned that the unexpected boost does not change the forecasts for a slower fourth quarter.
The July increase, seasonally adjusted, represents a 46 per cent gain over July 1976. June statistics, which had noted a 6 per cent drop, were revised to show only a 1 per cent decline8.
The latest report on the nation's housing brings the annual rate of all private home construction seasonally adjusted, to 2,064,000, a level exceeding the Carter administration's predictions last winter of 1.7 million new houses. It also tops the 1.86 million estimate made by the National Association of Homebuilders.
But NAHB's chief economist, Michael Sumichrast, said yesterday he would not revise his estimate upward as he expects building to taper off in the fourth quarter due to tighter money and scarcity of materials such as insulation.
Expectations within the industry that this year's building boom is subsiding may be reflected in a 3 per cent decrease in building permits in July, although analysts cuation against interpreting one month changes.
In the Washington metropolitan area, a 20 per cent drop in permits occurred in July, although the number was still 67 per cent above the July 1976 level. (This figure is not, however, seasonally adjusted to reflect normal July decreases.)
Sumichrast attributed the decline in permits to the low level of activity in construction of apartment houses.
Seventy per cent of the activity in this area continues to be in Fairfax County. Permits there rose to 1,339 in July from 828 the previous month. Permits in that county thus far this year are more than double the number issued in the same period in 1976, according to Sumichrast.
Last month single family housing starts increased nationally on a seasonally adjusted basis to 1.462 million, compared with 1.4 million units in June. But the most encouraging news, a Commerce Department economist said, was the 22 per cent increase in apartment building construction.
This indicates, he said, that the administration's efforts to push multi-family housing are beginning to pay off. Starts in July reached 499,000, the highest level this year.
By comparison, starts of single family homes were lower in July than they were in March, when the housing market experienced its biggest spurt thus far this year. But even if multi-family housing reaches the half million mark this year, that will only bring it up to about half the number, built in the early '70s.
Another encouraging sign was the 26 per cent rise in construction experienced in the Northeast, compared with a 15 per cent increase in the West. The Northeast has taken much longer to recover from the recession than has the West. Although the actual number of starts in the Northeast is less than half that of the West, the increase has been steady this year, now reaching 238,000 units on an annual basis. By contrast, there were 548,000 units under construction in the West during July, down from the year's peak of 591,000 in February.