Is the demand for housing continuing to remain firm for the second half of the year? Housing starts rose 4.8% from a month earlier to a seasonally adjusted annual rate of 1.189 million in June, according to the Commerce Department. This article from Anna Louie Sussman of The Wall Street Journal highlights the major housing starts from recent months.
That steadily rising demand has led to concerns about the low inventory of new and existing homes on the market, which is pushing up prices and could weigh on further expansion. But Tuesday’s report showed an estimated 1.015 million homes under construction in June, the highest level since February 2008.
June’s uptick was driven by a jump in starts in the West and the Northeast, two of the pricier regions in the country. The conditions underpinning demand are still in place, namely historically low interest rates and steady—if slowly moderating—job creation.
Starts on single-family homes, which account for roughly two-thirds of new construction, rose 4.4% in June from May, to 778,000. May single-family starts were revised down.
Starts on multifamily buildings with five or more units, which include apartments and condominiums, rose 1.6% to a rate of 392,000 in June from the prior month.
The market has swung to the single-family market over the first half of the year, with those starts up 13.2% in the first six months of 2016, compared with a year ago. Housing starts in structures with five or more apartments fell by 3.9% in the year-to-date from the same period in 2015. Still, the pace of apartment units already under construction in June hit 573,000, the highest since 1974.
New applications for building permits, a bellwether for forthcoming construction, rose 1.5% to 1.153 million, from a downwardly revised May figure. Permits have lagged behind housing starts since February, which some fear could signal weakness in the housing market going forward.
“Favorable weather conditions might help explain the overshoot in starts compared to April and May permits; either way, they’ll need to correct over the next few months,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The 4.8% rise handily beat the 0.9% forecast from economists surveyed by The Wall Street Journal, but home-starts figures are volatile and often revised. June’s figure came with a margin of error of plus or minus 13.5 percentage points, and May’s starts figure was revised down to 1.135 million from an initial estimate of 1.164 million.
The market got off to a slow start to the year, but overall steady housing demand in the past year has driven up home prices in many markets amid a shortage of inventory. Builders have been struggling to keep pace, with many reporting shortages of skilled construction labor and affordable lots on which to build.
[Read the full article here.]
