Housing Construction Trends Improve in June, Says NAHB

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Total housing starts expanded 9.8% month over month in June, reaching a 1.174 million annual starts pace, which was led by a surge in multifamily development, the National Association of Builders (NAHB) reports. Single-family starts were effectively flat, recording a 0.9% monthly decline to a 685,000 seasonally adjusted annual rate, but were up 14.7% year over year.

As measured on a three-month moving average, the pace of single-family starts hit a post-recession high in June. Looking forward, single-family permits were up 0.9% for June and 6% year over year, reaching a 687,000 annual rate. Regionally, single-family starts were higher by 6.8% for the month in the South, but down 27.3% in the Northeast, 7.1% in the West, and 4% in the Midwest.

In addition, the National Association of Realtors’ measure of existing home sales increased 3.2% in June, reaching the highest level since February 2007. Given that most new home sales are to move-up buyers, a rise in the volume of existing sales bodes well for additional single-family construction, notes NAHB. However, inventory of resale homes continues to be limited, falling to a five-month supply in June at the current sales rate.

The standout of the June housing starts report was multifamily construction, which for units in buildings with five or more units climbed to a 476,000 annual rate with a 28.6% monthly growth rate. Permits also expanded, jumping 16.1% to a 621,000 annual rate. NAHB expects this level of apartment development to cool in coming months.

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