Single-family production fell last month as rising construction costs and borrowing rates slowed home construction activity after four months of growth.
According to a study from the US Department of Housing and Urban Development and the US Census Bureau, overall home starts fell 8% in June to a seasonally adjusted annual pace of 1.43 million units.
The June value of 1.43 million starts represents the number of dwelling units that builders would commence if construction continued at this rate for the next 12 months. Within this total, single-family starts fell 7% to a seasonally adjusted annual rate of 935,000. Single-family starts are also down 7.4% from a year ago. The multifamily sector, which includes apartment buildings and condos, grew 9.9% year on year to 499,000 units.
“Housing starts fell monthly in June as tightening monetary policy helped push mortgage rates up more than a quarter-point over the past month,” said Alicia Huey, NAHB chairman and custom home builder and developer from Birmingham, Ala. “Policymakers must remove regulatory bottlenecks that impede the housing industry’s ability to increase production of high-quality, low-cost housing.”
“While builders have slowed construction activity as interest rates approached 7%,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “As a result, as affordability conditions improve, home buyers may return to the market.” Nevertheless, single-family permits have reached their highest level since June 2022, indicating cautious builder optimism.”
The number of single-family homes under construction has dropped 17% year on year to 688,000. Meanwhile, the total number of flats under construction has risen to 994,000, the highest figure since May 1973.
Single-family and multifamily starts are 13.9% lower in the Northeast, 19.4% lower in the Midwest, 11.5% lower in the South, and 21% lower in the West year to date.
In June, overall permits fell 3.7% to a 1.44 million unit yearly rate. Permits for single-family homes grew 2.2% to 922,000 units, but are down 21.5% year to year. Multifamily permits fell 12.8% to an annualized rate of 518,000, the lowest level since October 2020.
Permits are 23.4% lower in the Northeast, 20.8% lower in the Midwest, 16.2% lower in the South, and 23.6% lower in the West year to date, according to regional permit data.
