Housing Starts Slide in June
Housing starts dropped 5.3% in June to a seasonally adjusted annual rate of 1.850 million units, 11% below the pace of a year earlier, according to figures released by the Commerce Department on July 19.
Single-family housing starts declined 6.5% last month to a rate of 1.486 million units, which was 13.8% below a year earlier, and multifamily construction rose 0.3% to a 364,000-unit pace.
“NAHB’s surveys of single-family builders have been showing a steady decline in confidence since the middle of last year, and builders are acting accordingly,” said NAHB President David Pressly. “They are slowing their production as market conditions and demand cool down.”
“The June declines in single-family starts and permits clearly show that the housing downswing still is underway, a pattern consistent with our signals from the field,” said NAHB Chief Economist David Seiders. “Builders are reporting not only systematic declines in home sales, but also increases in sales cancellations and inventories — due to eroding affordability conditions as well as a withdrawal of investors/speculators from the market.”
Regionally, construction of new homes and apartments in June was down 11.5% in the Northeast, 10.2% in the West and 4.0% in the South. Housing starts increased 3.0% in the Midwest following a large decline during the previous month.
Issuance of total building permits fell 4.3% in June to a seasonably adjusted annual rate of 1.862 million units, 14.9% below the year-earlier pace. Single-family permits dropped 6.3% to 1.395 million units, reflecting declines from every region of the country. Multifamily permits rose 2.0% to 467,000 units, but were still 6.2% below the rate during June 2005.
“In view of the obvious downward momentum in the housing sector, as well as the considerable downside risks that lie ahead, the Federal Reserve should proceed with great caution as it manages monetary policy in the coming months,” said Seiders.
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