U.S. housing starts dropped in June, falling 0.9 percent to 1.253 million units from a downwardly revised 1.265 million units in April. Market expectations were a slightly smaller fall of 0.7 percent. The decline was concentrated in the volatile multi-family segment, which dropped 9.2 percent to 406k, breaking a four-month streak of rises. The larger single-family segment recorded a rise of 3.5 percent to 847k.
Permits dropped 6.1 percent to 1.22 million in June. Multi-family permits dropped 16.8 percent after a more modest 3 percent fall in the previous month, while single-family permits rose marginally by 0.4 percent.
Region wise, the results were evenly split with starts down in the South and West, but up in the Northeast and the Midwest.
Housing starts continue to move sideways in the U.S. the pullback in building permits in June implies further softness might be in the pipeline, stated TD Economics in a research report.
Builders continue to face challenges from rising costs, lack of land and labor shortages, impeding their ability to fully take advantage lower borrowing rates to construct more in demand entry-level units. The housing market continues to face tight inventories and weak sales.
“On the demand side, affordability should remain favorable relative to the past few years, as interest rates stay low and wage growth accelerates”, added TD Economics.
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