Home Builders Reverse Rally On August Construction News

Home builders' stocks continued their recent roller coaster ride Thursday when investors learned that August U.S. home construction tumbled by 14 percent. The news reversed a day-earlier rally in the sector, touched off by an improved outlook from Lennar Corp.

and a trade survey that said builder confidence rose for a fourth consecutive month in September. Housing starts fell last month to a seasonally adjusted annual rate of 956,000 units, from an annual rate of 1.12 million in July, according to the U.S. Commerce Department. Still, the August figure is up 8 percent from a year earlier. An economist with the real estate company Trulia Inc.

noted Thursday that vacancy rate for single-family homes was 10.7 percent in 2013, compared with 7.4 percent in 2000. "We're still building single family homes faster than we can fill them," Trulia's Jed Kolko told CBS News Thursday. August's decline in home construction was led by multi-family projects which fell 31.5 percent from July. The August rate for units in buildings with five or more units was 304,000. Single-family housing starts in August fell by a more modest 2.4 percent to a rate of 643,000 units, from 659,00 units in July. In a measure of future activity, building permits issued in August fell 5.6 percent to an annual rate of 998,00 units. Among the larger home builders, PulteGroup Inc.

traded down Thursday afternoon by more than 1 percent. D.R. Horton Inc.

and NVR Inc.

fell by similar percentages. The smaller M.D.C. Holdings Inc.

and M/I Homes Inc.

were each off more than 2 percent.