U.S. home builders may be cutting back sharply on the number of new homes built, but it may not be fast enough for a housing market moving even more quickly in reverse. Single-family housing starts fell 2.9 percent to a seasonally-adjusted annual rate of 641,000 in July, the lowest level since January 1991; but completions remained well above starts, at a rate of 791,000, according to data released Tuesday morning by the Commerce Department. In other words, builders are frenetically pulling back on starts but still completing far more homes than they're starting each month; with anemic demand tied to rising foreclosures and tighter credit standards, an elevated completions number relative to new single-familly starts suggest that builders may yet be pushing too many homes out onto the market despite efforts to pull back. "The data paints a picture of buidlers pulling back, but not enough and not fast enough," said one source, a senior executive at a commercial bank that asked not to be named. The headline housing starts figure, which includes multi-family building activity, fell 11 percent to a seasonally adjusted annual rate of 965,000 in July; but this number was largely the hangover of a surge in permits and starts in June tied to a new building code in New York City that led to a rush of condo and apartment starts last month. Starts seem likely to fall even further in the weeks ahead, too, with single-family permits falling sharply to a rate of 584,000, a 26-year low and 5.2 percent below June's 616,000 figure. All of which suggests that builders are far from seeing the end of the tunnel in current troubles in the new-home market; the National Association of Home Builders tried to put a brave face on record-low builder confidence numbers earlier on Monday, suggesting that a small uptick in builders' outlook for the next six months portended slightly better conditions and pointing to a recently-passed tax credit as a likely driver of demand for new housing. See full story. HW's key sources aren't buying it. "I wish it weren't so, but there is too much in the way of new housing stock right now, and there's an absolute glut of existing home inventory," said one source, an ABS analyst that regularly corresponds with HW. "If anything, the tax credit may help clear some of the new home inventory already out there, but with completions still running ahead of starts, I'd expect it will do little to improve prospects in the near-term for most builders." Related links: July New Residential Construction report