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Housing Starts Fall in June, But Positive Trends Continue

by Peter Thomas Ricci

Though builder confidence hit its highest mark in seven years this week, the latest construction report from the Census Bureau was underwhelming…or was it?

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June was a bit of a downer for new construction – at least on the surface – with most construction activity declining from May, according to the latest analysis by the U.S. Census Bureau.

Housing starts, by far the most eagerly anticipated of the Census Bureau’s data, fell by 9.9 percent from May to June, though June’s seasonally adjusted annual rate of 836,000 housing starts remained 10.4 percent above June 2012’s total.

Housing Starts and Building Permits Down in June

Single-family housing starts for June were more consistent, falling just 0.8 percent from May, but multifamily starts, which are typically more on the erratic side, were down 23 percent and the likely culprit for the overall negative numbers. Other notable information from the Census Bureau’s report included:

  • Building permits, which anticipate future construction activity, also fell in June, declining 7.5 percent from May; like housing starts, though, building permits retained their year-over-year increases, remaining 16.1 percent above June 2012.
  • Multifamily building permits were as erratic as their starts-counterpart, falling 20 percent from May.

Positivity Beneath the Surface

Though those numbers paint a grim picture for housing construction in June, the scenario was not all bad. Single-family authorizations, for instance, which cover permits for single-family homes, actually rose, increasing by 0.6 percent from May to June.

And on Calculated Risk, Bill McBride noted that at their current level of 624,000, single-family authorizations are now at their highest mark since May 2008, and year-t0-date, both multifamily starts and single-family starts are far ahead of 2012 levels, up 34 percent and 20 percent, respectively.

And housing completions, which report how many new homes entered the for-sale market, were up 6.3 percent from May and 20.2 percent from June 2012 to a rate of 755,000, which bodes well for housing inventory.

With numbers like that, it’s easy to see why builder confidence hit its highest mark in seven years this month.

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