Single-family housing permits and starts were higher in June as housing demand and construction remains a bright spot for the overall economy. Demand is being supported by low interest rates and renewed focus on the importance of home amidst the virus crisis. Single-family starts in June were estimated by Census/HUD at an 831,000 seasonally adjusted annual rate, after an revised estimate of 709,000 for May.
Consistent with recent gains in the NAHB/Wells Fargo Housing Market Index (HMI), which has recovered to pre-recession levels, single-family permits increased almost 12% in June. Total permits for single-family homes issued in 2020 on a year-to-date basis are 3.4% higher than the first six months of 2019, albeit off weak data from the start of 2019. The increase in the pace of permits and resurgent builder confidence signals gains for single-family starts ahead.
Looking back, it appears single-family starts bottomed out in April at a 679,000 annualized rate. This would mark a 34% decline from the peak starts pace in February. The June pace remains lower on a year-over-year basis (-3.9%) but is better than forecast a few months ago.
Single-family starts, on a year-to-date basis, are down just 1.3% relative to the first half of 2019. Thus far, single-family starts are down on a year-to-date basis 8% in the Northeast, down 2% in the South, flat in the Midwest, but are 2% higher in the West (led by the fast growing Mountain states).
Construction starts for the multifamily sector, which includes apartment buildings and condos, increased 18% to a 355,000 pace in June. This reflects a 43% decline for multifamily construction relative to the strong January pace. NAHB’s forecast calls for multifamily construction to decline more than single-family construction as a result of the 2020 downturn, so these numbers are well above forecast.
In terms of economic impact, there were 497,000 single-family homes under various stages of construction in June. This is the lowest such count since the fall of 2017 and is down almost 5% from a year, as the impact of recent months’ single-family starts declines takes hold.
There were 665,000 multifamily units under construction in June. This is almost 8% higher than a year ago.