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Macro Pulse highlights recent activity and events expected to affect the U.S. economy over the next 24 months. While the review is of the entire U.S. economy its particular focus is on developments affecting the Forest Products industry. Everyone with a stake in any level of the sector can benefit from
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Wednesday, August 20, 2014

July 2014 Residential Permits, Starts and Completions

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Total housing starts advanced noticeably in July, to a seasonally adjusted and annualized rate (SAAR) of 1.093 million units -- the fastest rate since November 2013. That level was 148,000 more units (15.7 percent) than June’s 945,000 (upwardly revised from the initial estimate of 893,000), and just 1.1 percent below November’s peak of 1.105 million units. Nearly two-thirds of the total increase occurred in the multi-family component (98,000 units or 28.9 percent); single-family starts rose by 50,000 units (8.3 percent). 
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Unsurprisingly, the year-over-year percentage change in total starts also picked up speed in July, jumping to 20.2 percent. Single-family starts were 7.3 percent above their year-earlier level; the more volatile multi-family component surged to 48.1 percent above its July 2013 level. 
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Completions increased by 30,000 units (3.7 percent) in July, to 841,000 units SAAR. All of the increase occurred in the single-family component (+37,000 units or 6.2 percent) as the multi-family component decreased (-7,000 units or 3.3 percent). Total completions were 5.2 percent above their year-earlier level. 
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Total permits rose by 79,000 units (8.1 percent), to 1.052 million SAAR in July. Similar to the case with starts, the increase occurred almost entirely in the multi-family component (73,000 units or 21.5 percent). Single-family permits inched higher (6,000 units or 0.9 percent). Total permits were 7.6 percent above year-earlier levels -- single- and multi-family components were, respectively, 3.9 and 14.6 percent higher.
It is still too early to tell whether the slide in the rate of annual growth in total permits seen since late 2012 has come to an end. That may be the case, as the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose two points in August, to 55; this third consecutive monthly gain brings the index to its highest level since January. An index value above 50 means more builders feel the market is good than feel it is poor. 
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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

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