The Census Bureau reported(.pdf) that housing starts rose 1.7 percent in July, but permits for new construction fell 3.1 percent as residential construction remains in the doldrums, only a small and very short-lived boost coming from the recently expired homebuyer tax credit.

Both measures of new home construction fell short of expectations. Housing starts rose from a downwardly revised annual rate of 537,000 units in June to 546,000 in July, about 20,000 short of consensus estimates, while permits for new construction fell from a downwardly revised rate of 583,000 to just 565,000, the lowest level in 14 months.

Multi-family home construction drove the overall gain for housing starts, up 33 percent in July after a similar sized drop in June. Single-family home starts fell 4.2 percent last month following a 1.7 percent decline the month before and the outlook remains bleak for the homebuilders, as confirmed by the 17-month low in the housing market index yesterday.