Not very surprisingly, US housing starts corrected downward somewhat for June, as housing inventory for sale continues to shrink and home prices continue to rise.
U.S. new-home groundbreaking and permits fell in June to the slowest paces in nine months, as higher mortgage rates and elevated costs for labor and materials pinch the housing market, government figures showed Wednesday. Housing starts in the US tumbled -12.3% to a seasonally adjusted annual rate of 1.173 million units last month, the lowest level since September 2017, the US Commerce Department said Tuesday. The percent drop was the largest since November 2016 and both single and multi-family home construction declined in June.
Data for May was revised down to show starts rising at a 1.337 million-unit rate instead of the previously reported 1.350 million-unit rate. Starts fell in all four regions last month.
Building permits dropped -2.2% to a rate of 1.273 million units, also the lowest level since September 2017.
Housing Starts, US
US homebuilding fell to a nine-month low in June and permits for future construction declined for a third straight month, dealing a blow to the housing market as it struggles with a dearth of properties available for sale, said the US Commerce Department Wednesday.
Wednesday’s report wasn’t as bad as the main numbers indicate, according to Ian Shepherdson of Pantheon Macroeconomics, who pointed out to Reuters Wednesday that the “most important” number, single-family permits, rose +0.8% from the prior month. At the same time, the trends in both construction and sales of such homes “have been about flat, more or less, since last fall,” and the housing market has probably peaked for this expansion, Shepherdson wrote in a note.
“We’re seeing pressure on both sides of the market, from increasingly expensive inputs on the supply side to prices that are charging ahead of wage growth on the demand side, and the result is that neither builders nor buyers can keep up.” — John Pataky, executive vice president at TIAA Bank in Jacksonville, FL, via Reuters.
Single-family homebuilding, which accounts for the largest share of the housing market, decreased -9.1% to a rate of 858,000 units in June. Single-family homebuilding has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years.
While permits to build single-family homes rose +0.8% in June to a pace of 850,000 units, they continued to trail starts. This suggests limited scope for a pick-up in single-family homebuilding in the months ahead.
Starts for the volatile multi-family housing segment plunged -19.8% to a rate of 315,000 units in June. Groundbreaking on buildings with five units or more fell to a 10-month low.
Permits for the construction of multi-family homes dropped -7.6% to a pace of 423,000 units.
A survey on Tuesday showed confidence among single-family homebuilders unchanged in July, with builders continuing to be “burdened by rising construction material costs.”
“The June report builds on what has been a soft run for many of the housing indicators through much of the year to date, and it signals that residential investment will likely continue to look weak in the coming months,” said Daniel Silver, an economist at JPMorgan in New York to Reuters.