NAHB: Single-Family Starts Decline in June

After four consecutive monthly advances, single-family production dropped back, as rising construction costs and mortgage rates reduced home building activity and exacerbated affordability difficulties for home buyers.

According to a report from the U.S. Department of Housing and Urban Development and the Census Bureau, overall home starts fell 8% in June to a seasonally adjusted annual pace of 1.43 million units.

The June figure of 1.43 million starts represents the number of dwelling units that would be built if construction continued at this rate for the next 12 months.

Within this overall figure, single-family starts fell 7% to a seasonally adjusted annual rate of 935,000.

Single-family starts are also down 7.4% year on year. The multifamily sector, which includes apartment buildings and condos, fell 9.9% to 499,000 units on an annualized basis.

“Housing starts posted a monthly decline in June, as tightening monetary policy helped push mortgage rates up more than a quarter-point over the past month,” stated Alicia Huey, head of the National Association of Home Builders (NAHB), a Birmingham, Alabama-based custom home builder, and developer.

“Policymakers need to remove regulatory bottlenecks that impede the housing industry’s ability to increase the production of quality, affordable housing.”

“While builders have slowed construction activity as interest rates have approached 7%, we anticipate mortgage rates will stabilize later this year in anticipation of the end of the Federal Reserve’s tightening cycle,” said NAHB’s assistant vice president for forecasting and analysis, Danushka Nanayakkara-Skillington.

“In turn, this could bring home buyers back to the market as affordability conditions improve. Another sign of cautious builder optimism is that single-family permits registered their highest pace since June 2022.”

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.