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News » US » June sees drops in housing starts and building permits » published 19 Jul 2018

June sees drops in housing starts and building permits

There were falls in the volume of housing projects started in June and in the number building permits, when compared both to May 2018 and to June 2017.

The overall number of building permits for privately owned housing fell in June compared both to May 2018 and June 2017, though there was a rise in authorizations for single-family homes. Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,273,000, according to the latest figures from the US Census Bureau and the U.S. Department of Housing & Urban Development. The figure is 2.2% (±1.2%) below the revised May rate of 1,301,000 and is 3.0% (±1.1%) below the June 2017 rate of 1,312,000. Single-family authorizations in June were at a rate of 850,000, which is 0.8% (±1.5%) above the revised May figure of 843,000.

Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,173,000, which is 12.3% (±8.3%) below the revised May estimate of 1,337,000 and is 4.2% (±10.2%) below the June 2017 rate of 1,225,000. Single-family housing starts in June were at a rate of 858,000; this is 9.1% (±8.8%) below the revised May figure of 944,000. The June rate for units in buildings with five units or more was 304,000.

PwC principal Scott Volling said: “The results for June are both surprising and disappointing. While it is not uncommon to see a bit of a drop-off in starts and permits at the end of summer before rebounding again in the fall, the June results are a bit perplexing. Given the recent four- to five-month stretch of relative strength in starts and permits, and without an anomaly such as extreme atypical weather to blame, the results are clearly counter to recent trends.” He added that, with builder sentiment still at lofty levels - despite being flat month to month - the sharp drop in starts and permits may indicate that labor constraints may be impacting builders' ability to complete homes more than had been thought. “Challenges with labor costs and material costs, particularly in a rising rate environment, are typically more than enough to slow starts and permits,” he said. “However, the severe shortage of homes for sale has buoyed the builders through strong demand for new homes. Based on today's numbers, the strong builder sentiment may be more a reflection of builders' confidence in their ability to quickly sell what they build, but not necessarily confidence in their ability to build at a velocity and price point that the market may dictate.

The figure for completions of privately-owned housing also fell in June were to a seasonally adjusted annual rate of 1,261,000. This the same as the revised May estimate of 1,261,000, but is 2.2% (±14.5%) above the June 2017 rate of 1,234,000. Single-family housing completions in June were at a rate of 862,000. which is 2.3% (±8.4%) below the revised May rate of 882,000. The June rate for units in buildings with five units or more was 393,000.

 

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This article was published on 19 Jul 2018 (last updated on 19 Jul 2018).

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