Housing starts slide in June
Housing starts continued to fade in 2022 as the market battles inflation, increased interest rates, and affordability challenges.
Housing starts in June were at a seasonally adjusted annual rate of 1.559 million, falling 2% below the revised May estimate of 1.591 million.
According to the latest Monthly New Residential Construction report, this is a 6.3% drop from the June 2021 rate of 1.664 million.
Single‐family housing starts in June fell 8.1% to a rate of 982,000 from the revised May figure of 1.068 million.
“Single-family starts are retreating on higher construction costs and interest rates, and this decline is reflected in our latest builder surveys, which show a steep drop in builder sentiment for the single-family market,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Ga. “Builders are reporting weakening traffic as housing affordability declines.”
But the June rate for units in buildings with five units or more was 568,000, jumping ahead 15% from a revised rate of 494,000 in May and climbing 16.4% from the June 2021 rate.
Residential building permits slipped 0.6% in June to a seasonally adjusted annual rate of 1.68 million compared to the revised May rate of 1.695 million.
Single‐family permits decreased 8% to a rate of 967,000 in comparison to the revised May figure of 1.051 million.
Authorizations of units in buildings with five units or more were at a rate of 666,000 in June, increasing 13.1% above the previous month and soaring nearly 28% compared to June 2021.
“While the multifamily market remains strong on solid rental housing demand, the softening of single-family construction data should send a strong signal to the Federal Reserve that tighter financial conditions are producing a housing downturn,” said NAHB Chief Economist Robert Dietz. “Price growth will slow significantly this year, but a housing deficit relative to demographic need will persist through this ongoing cyclical downturn.”
Here’s how housing starts and permits performed on a regional basis:
- In the Northeast, total starts increased 10.6% as single-family declined 12.7%. Total permits jumped 18% but single-family permits were down 14.8%.
- In the Midwest, total starts were down 7.7% as single-family starts edged ahead 2.1%. Combined permits diminished by 15.7% and single-family permits saw a downturn of 9.8%.
- In the South, combined starts fell 4.8% as single-family starts dipped 2.1%. Permits dropped 2.1% and single-family permits fell 5%.
- In the West, overall starts saw a 3.7% increase but single-family starts tumbled by 25.4%. Total permits climbed 5.8% as single-family permits plunged 13.2%.
This report arrives as home builder confidence for July declined 12 points to 55, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Index (HMI).
According to the NAHB, this marks the lowest HMI reading since May 2020 and the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.