Single-Family Starts Weaken in June
Higher interest rates for home mortgages and construction loans constrained both single-family home production and demand in June.
According to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, overall housing starts rose by 3.0% in June to reach a seasonally adjusted annual rate of 1.35 million units.
According to the NAHB, lower single-family starts are in line with our latest industry surveys, which show that builders are concerned about the current high interest rate environment. With better inflation data, the Federal Reserve is expected to begin rate reductions later this year. An improving interest rate environment will help buyers as well as builders and developers who are contending with tight lending conditions and high interest rates. And with total (new and existing) home inventory at a relatively low 4.4 months’ supply, builders are prepared to increase production in the months ahead. Indeed, NAHB survey data of forward-looking builder sales expectations saw a gain in July.
The volatile multifamily sector, which includes apartment buildings and condos, increased 19.6% in June to an annualized 373,000 pace. The general trend for apartment construction is lower however. The pace of multifamily 5-plus unit starts are down 23.4% from a year ago. And on a year-to-date basis, multifamily 5-plus unit starts are down 36.3%.
On a regional and year-to-date basis, combined single-family and multifamily starts 9.9% lower in the Northeast, 3.4% lower in the Midwest, 3.5% lower in the South and 0.7% higher in the West.
Overall permits increased 3.4% to a 1.45 million unit annualized rate in June. Single-family permits decreased 2.3% to a 934,000 unit rate. Multifamily permits increased 15.6% to an annualized 512,000 pace.
Looking at regional data on a year-to-date basis, permits are 0.8% lower in the Northeast, 3.0% higher in the Midwest, 0.7% lower in the South and 3.8% lower in the West.
