WASHINGTON (MarketWatch) — Construction started on U.S. homes fell in June to the lowest rate in almost a year, with a big slide in apartment building, according to government data released Wednesday.
Housing starts fell 9.9% in June to a seasonally adjusted annual rate of 836,000, the lowest level since August 2012. Starts for buildings with at least five units, a volatile category, fell 26.7%. Meanwhile, starts for single-family homes declined 0.8%.
Economists polled by MarketWatch had forecast total housing starts in June to hit an annual rate of 950,000, compared with an originally estimated May starts rate of 914,000.
On Wednesday, the government revised May’s starts rate to 928,000. Starts in June were up 10.4% from the same period in the prior year, pointing to continuing recovery, though there’s been concern that rising mortgage rates will curb the housing market’s rebound.
Higher rates cut home affordability, and some buyers will scale back their purchase plans. However, rising rates could spur others to rush into the market before affordability declines any further. Indeed, even with recent gains, mortgage rates are still relatively low.
And with steady job growth, economists expect the housing market to continue to contribute to economic growth this year, though possibly at a slower pace.
Building permits, a sign of future demand, fell 7.5% in June — the sharpest contraction since January 2011 — to an annual rate of 911,000. However, permits were up 16.1% from the same period in the prior year.
“Looking ahead we expect activity in new residential construction to continue to pick up speed, as home builders take their cue from rising prices and the tight inventory of existing homes,” Ksenia Bushmeneva, an economist at TD Economics, wrote in a research note. Permits for buildings with at least five units fell 22.8% in June.
Meanwhile, permits for single-family homes nudged up 0.6% to an annual rate of 624,000, the highest rate since May 2008.
“There is still a large stock of unused permits from previous months, so we don’t view this as a sign that the housing recovery has come to an end,” wrote Avery Shenfeld of CIBC World Markets in a research note.Despite gains over the past year, housing starts remain far below a peak annualized rate of almost 2.3 million in early 2006.
Economists estimate that roughly 1.7 million new homes are needed each year to accommodate additional households, replacement structures and vacation homes. Home builders are becoming cheerier.
Data released Tuesday showed that a barometer of builders’ views on present sales recently hit the highest level since 2006, while a gauge of their expectations for sales over the next six months reached the highest level since 2005.
However, builders’ views are far higher than those typically associated with the current level of new-home construction.
marketwatch.com
Housing starts fell 9.9% in June to a seasonally adjusted annual rate of 836,000, the lowest level since August 2012. Starts for buildings with at least five units, a volatile category, fell 26.7%. Meanwhile, starts for single-family homes declined 0.8%.
Economists polled by MarketWatch had forecast total housing starts in June to hit an annual rate of 950,000, compared with an originally estimated May starts rate of 914,000.
On Wednesday, the government revised May’s starts rate to 928,000. Starts in June were up 10.4% from the same period in the prior year, pointing to continuing recovery, though there’s been concern that rising mortgage rates will curb the housing market’s rebound.
Higher rates cut home affordability, and some buyers will scale back their purchase plans. However, rising rates could spur others to rush into the market before affordability declines any further. Indeed, even with recent gains, mortgage rates are still relatively low.
And with steady job growth, economists expect the housing market to continue to contribute to economic growth this year, though possibly at a slower pace.
Building permits, a sign of future demand, fell 7.5% in June — the sharpest contraction since January 2011 — to an annual rate of 911,000. However, permits were up 16.1% from the same period in the prior year.
“Looking ahead we expect activity in new residential construction to continue to pick up speed, as home builders take their cue from rising prices and the tight inventory of existing homes,” Ksenia Bushmeneva, an economist at TD Economics, wrote in a research note. Permits for buildings with at least five units fell 22.8% in June.
Meanwhile, permits for single-family homes nudged up 0.6% to an annual rate of 624,000, the highest rate since May 2008.
“There is still a large stock of unused permits from previous months, so we don’t view this as a sign that the housing recovery has come to an end,” wrote Avery Shenfeld of CIBC World Markets in a research note.Despite gains over the past year, housing starts remain far below a peak annualized rate of almost 2.3 million in early 2006.
Economists estimate that roughly 1.7 million new homes are needed each year to accommodate additional households, replacement structures and vacation homes. Home builders are becoming cheerier.
Data released Tuesday showed that a barometer of builders’ views on present sales recently hit the highest level since 2006, while a gauge of their expectations for sales over the next six months reached the highest level since 2005.
However, builders’ views are far higher than those typically associated with the current level of new-home construction.
marketwatch.com
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