Building Permits Post a Solid Gain, Reaching a 12-Month High
Though United States single-family homebuilding fell in June, increasing 2.2% in June to a rate of 922,000 units, permits for future construction of single-family homes increased to its highest level since June 2022. Surges for building permits were most seen in the Midwest and South, and remained unchanged in the Northeast and West. This is seen as the severe shortage of previously owned houses for sale supports new construction.
“While builders have slowed construction activity as interest rates have approached 7%, we anticipate mortgage rates will stabilize later this year in anticipation of the end of Federal Reserve’s tightening cycle,” said National Association of Home Builders (NAHB) Assistant Vice President of Forecasting and Analysis Danushka Nanayakkara-Skillington. “In turn, this could bring home buyers back to the market as affordability conditions improve. And in another sign of cautious builder optimism, single-family permits registered their highest pace since June 2022.”
According to NAHB, the number of single-family units under construction is down 17% compared to a year ago at 688,000. Meanwhile, the number of apartments under construction increased to 994,000, the highest total since May 1973.
On a regional and year-to-date basis, combined single-family and multifamily starts are 13.9% lower in the Northeast, 19.4% lower in the Midwest, 11.5% lower in the South and 21% lower in the West.
Overall permits decreased 3.7% to a 1.44 million unit annualized rate in June. Single-family permits increased 2.2% to a 922,000 unit rate but are down 21.5% year-to-date. Multifamily permits decreased 12.8% to an annualized 518,000 pace, the lowest level since October 2020.
