U.S. single-family home starts fell 7% in June after four consecutive increases, but permits – an indication of future home builds – were up 2.2%.
WASHINGTON – After four straight months of gain, June’s single-family production fell, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Overall housing starts, which includes multifamily housing, decreased 8% to a seasonally adjusted annual rate of 1.43 million units.
The National Association of Home Builders (NAHB) cited elevated construction costs and rising mortgage rates as the reason.
Within the overall number, single-family starts decreased 7% month-to-month and 7.4% year-to-year. The multifamily sector, which includes apartment buildings and condos, decreased 9.9% to an annualized 499,000 pace. Housing start numbers for any given month reflect the number of housing units builders would begin if development kept to the same pace for the next 12 months.
“Housing starts posted a monthly decline in June as tightening monetary policy helped push mortgage rates up more than a quarter-point over the past month,” says Alicia Huey, chairman of NAHB.
“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,” says Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “In turn, this could bring homebuyers 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.”
The number of single-family units in some phase of construction is down 17% compared to a year ago at 688,000, but 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
- 21% lower in the West
Overall permits decreased 3.7% to a 1.44 million unit annualized rate in June, though single-family permits increased 2.2% to a 922,000 unit rate. Still, single-family is down 21.5% year-to-date.
Multifamily permits decreased 12.8% to an annualized 518,000 pace, the lowest level since October 2020.
Looking at regional permit data on a year-to-date basis, permits are:
- 23.4% lower in the Northeast
- 20.8% lower in the Midwest
- 16.2% lower in the South
- 23.6% lower in the West
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