US housing starts beat expectations in June, housing demand strengthens in Q2

The United States housing starts rose during the month of June, beating market expectations due to a broad rise in the country’s construction activity. This signaled that the nation’s home building is gaining importance into the second half of the year.

Housing starts rose 4.8 percent from a month earlier to a seasonally adjusted annual rate of 1.189 million in June, data released by the Department of Commerce showed Tuesday. May’s starts were revised down to a 1.14 million-unit pace from the previously reported 1.16 million-unit pace. Economists polled by Reuters had forecast a median of 1.17 million-units of housing starts last month.

Groundbreaking on single-family homes, the largest segment of the market, increased 4.4 percent to a 778,000-unit pace in June. Single-family starts in the South, where most home building takes place, gained 0.5 percent. Single-family starts jumped 31.6 percent in the Northeast and climbed 3.1 percent in West. Groundbreaking on single-family housing projects increased 7.3 percent in the Midwest.

In addition, housing starts for the volatile multi-family segment rose 5.4 per cent to a 411,000-unit pace. Building permits increased 1.5 per cent to a 1.15 million-unit rate last month. Permits for the construction of single-family homes increased 1.0 per cent last month to a 738,000-unit rate, while multi-family building permits advanced 2.5 per cent to a 415,000-unit pace.

Moreover, the multi-family segment of the real estate market continues to witness an inflow of demand, buoyed by strong rental accommodation demand as some Americans remain wary of homeownership in the aftermath of the housing market collapse.

Meanwhile, economists foresee limited scope for further boom in the housing market, saying that much demand has already been catered to. Further, rent increases for apartments have started to moderate in some cities and vacancy rates are edging up.