Construction of single-family homes in the US fell in June, but permits for future construction rose to a 12-month high due to a weak market for existing home sales. The decline in housing started came after a massive Increase of 18.7% in Maywhich drove the number of single-family project starts to a high of 11 months.
Housing starts in June fell to a seasonally adjusted annual rate of 1.43 million, below economists’ expectations of 1.48 million, according to the US Census Bureau. That was 8.1% less than a year ago.
In June, only 600,000 existing homes in the US were listed for sale, he noted brilliant mls Chief Economist Lisa Sturtevant.
“While new construction will not immediately solve the supply problem in the housing market, recovery in the homebuilding industry and the delivery of more new homes is essential to meet the nation’s housing needs and alleviate housing affordability challenges for prospective buyers,” it said in a statement.
Overall, June single-family home starts came in at a rate of 935,000, down 7% from the revised May figure of 1,005,000. The June rate for units in buildings with five or more units was 482,000.
Permits issued, an indicator of future terminations, were also down 3.7% overall from May, and were 15.3% lower than a year ago. But single-family permits increased (+2.2%) while the more volatile multi-family permits decreased (-12.8%). June permits increased in the Midwest (+5.9%) and decreased in the South (-2.6%), West (-4.0%), and Northeast (-23.4%).
Completed homes fell 3.3% from the previous month, but were 5.5% above the May 2022 level.
The number of single-family homes under construction remains high. Meanwhile, a record number of multi-family units are being built, even if the pace is slowing.
“When these units are completed, it should put some downward pressure on prices,” said First Deputy Chief Economist of the United States, Odeta Kushi.
Homebuilder confidence regarding single-family home sales over the next six months fell slightly in June, pointing to further uncertainty. This comes at a time when increasing new home inventory is critically important, as existing homeowners are not moving, tied to their low mortgage rates, said Nicole Bachaud, a senior economist at Zillow.
stubbornly tall mortgage rates it could pose a threat to the ability of builders to bring more homes to the market. Reduced affordability coupled with continued supply-side challenges and tighter credit standards for acquisition, development and construction (AD&C) loans could also dampen builders’ momentum, Kushi added.
