Housing starts slowed in June, dropping to a seasonally adjusted annual rate of 1.559 million, a decrease of 2% compared with May and a decrease of 6.3% compared with June 2021, according to estimates from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Starts of single‐family homes were at a rate of 982,000, a decrease of 8.1% compared with May. Starts of multifamily homes (five units or more per building) were at an annual rate of 568,000, an increase of 15% compared with the previous month.
Regionally, and on a year-to-date basis, combined single-family and multifamily starts were down 4.4% in the Northeast and 0.4% in the West, but were up 11.1% in the South and 4.7% in the Midwest.
Building permits were at an annual rate of 1.685 million, a decrease of 0.6% compared with May but an increase of 1.4% compared with June 2021.
Permits for single family homes were at a rate of 967,000, a decrease of 8.0% compared with May. Authorizations for multifamily dwellings were at a rate of 666,000, an increase of 13.1% compared with the previous month.
Regionally, and on an annual basis, permits were down 5.1% in the Northeast, but were up 2.5% in the Midwest, 2.9% in the South and 3.0% in the West.
Housing completions were at an annual rate of 1.365 million, a decrease of 4.6% compared with May and a decrease of 5.4% compared with June 2021.
“Single-family starts are retreating on higher construction costs and interest rates, and this decline is reflected in our latest builder surveys, which show a steep drop in builder sentiment for the single-family market,” says Jerry Konter, chairman of the National Association of Home Builders (NAHB), in a statement. “Builders are reporting weakening traffic as housing affordability declines.”
“While the multifamily market remains strong on solid rental housing demand, the softening of single-family construction data should send a strong signal to the Federal Reserve that tighter financial conditions are producing a housing downturn,” adds Robert Dietz, chief economist for NAHB. “Price growth will slow significantly this year, but a housing deficit relative to demographic need will persist through this ongoing cyclical downturn.”
Odeta Kushi, deputy chief economist for First American, points out that “Homebuilder confidence plunged in July for the seventh month in a row, driven by declines in all three components of the index: current single-family home sales, future sales expectations, and traffic of prospective buyers.
“Single-family housing starts in June were at a rate of 982,000, the lowest since 2020,” Kushi says. “This is 8.1 percent below the revised May figure and down 15.7 percent year over year. As homebuilder sentiment falls, so does homebuilding.”
“Homebuilding is a leading economic and housing indicator, and the decline in housing starts suggests housing is slowing,” Kushi adds. “Inflation hurts consumer confidence and purchasing power, while higher mortgage rates alongside high home prices dampen affordability. The result? A reduction in home buyer traffic and sales.”
Photo: Annie Gray