Pace of construction slows in June
Single-family housing starts across the US dropped 2.2% in June, hitting their lowest level since October last year as high borrowing costs continue to dampen the construction outlook.
The Commerce Department’s Census Bureau said on Wednesday that starts in the single-family segment fell to a seasonally adjusted annual rate of 980,000 units last month, with permits for future single-family construction also dipping (by 2.3%, to an adjusted rate of 934,000 units).
Still, compared with the same time last year, single-family starts were up 5.4% – and a jump in multi-family permits helped overall building permits exceed analysts’ expectations.
Across all segments, starts reached an annually adjusted pace of 1.35 million, above consensus estimates, with actual building permits also coming in higher than expected.
Total housing starts were up 3% in June to an annual rate of 1.35 million units, 4.4% lower than in June 2023. Single-family home starts fell 2.2% to an annual rate of 980,000. Home building permits were up 3.4% from May, but down 3.4% from last year #realestate #economy #housing pic.twitter.com/Gz7nhoo6Wx
— NAHB 🏠 (@NAHBhome) July 17, 2024
First American deputy chief economist Odeta Kushi noted a “bright spot” in the June report – namely, the fact that the sales expectations sub-index ticked upwards, indicating that homebuilder sentiment is likely to improve if mortgage rates fall by the end of the year. “This could signal that the bottom for single-family starts is near,” Kushi said.
Completions, or new supply being added to the market, also trended higher in June, helping improve housing inventory on a year-over-year basis and offering some good news for prospective buyers.
The market remains “structurally underbuilt”, according to Kushi. “For more than a decade, homebuilding has not kept up with the demand for shelter, creating a housing supply deficit that has proven difficult to reduce significantly,” she said. “As builders break ground on additional housing, we will inch closer to balancing our housing deficit.”
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