The U.S. Commerce Department reported Tuesday that home-building activity rose more than expected in July, increasing 1.5%.

That’s the fourth straight month of gains, and follows a revised increase of 5.7% in June. The gains add more evidence to the U.S. recovery story.

BMO Nesbitt Burns said that all of the strength came from single starts, which rose 1.9%. However, multi-family starts slipped 0.6%.

“This pace of construction is comparable to baby-boomer inspired rise in construction during the late 1970s,” said RBC Financial. “To give some perspective on the pace of construction activity, single-family starts have averaged 1.467 million over the last three months, about 4% above the pace of construction for all of 2002, which in itself was a hot year.”

“The results from a still-strong housing market are good news for home-related retailers. With child tax-rebate checks in hand, homebuyers will continue to march through home furnishings and electronics stores to fill their new homes,” Nesbitt suggested.


RBC said that the outlook for housing construction in the U.S. is still favourable. “There are, however some risks on the horizon for the homebuilding sector, including the slight rise in long term bond yield which have caused mortgage rates to creep higher and the lack of any significant pent-up demand remaining among households.”