The numbers are in for June’s Housing Starts Summary, and while both permits and starts are down that’s not the entire story. Housing starts are down overall 9.9% to 836,000,however, the bigger picture is that the bulk of this decline is due to the 26.7% drop in starts for buildings with five or more units, most likely apartment construction. Single-family home starts only dipped 0.8% in June’s Housing Starts Summary, and starts for both categories as a whole are still up 10.4% over this same time last year.
Permits are also down for June versus the prior month a decrease of 7.5%. The Housing Permits category mirrored the Housing Starts pattern, showing fall back the prior month but significant growth compared to the prior year. This June’s Housing Starts Summary reflected 911,000 total permits pulled, that’s 16.1% higher than June of 2012. The repeated year-to-year gains in both permitting and starts are a strong indicator that despite the inevitable peaks and valleys in the housing market, a recovery does appear to be underway. In fact, while permits for multifamily construction dipped 22.8% in this month’s Housing Starts Summary, permits for single-family homes were the highest since May 2008—at 624,000, up 0.6%.
The question for many may be, will demand for new homes continue? Many economists and builders believe the answer is yes. The July Housing Markets Index report, which gauges builder’s optimism, reflected an overall jump of 6 points to 57. Any score in the Housing Market Index over 50 indicates that most builders perceive conditions to be improving. There were gains in all three components of the HMI, meaning builders are seeing more buyer traffic, think the current conditions are improving, and expect good things for the next 6 months. Many permits pulled from previous months have yet to be used, so economists such as Avery Shenfeld of CIBC World Markets expect that recovery and construction starts will maintain momentum. Whereas monthly numbers in June’s Housing Starts Summary have dipped due to a slowdown in apartment building, single-family construction is on the rise, and the general outlook for both remains positive.
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Sources:
1) http://www.marketwatch.com/story/home-construction-lowest-in-almost-a-year-2013-07-17?link=MW_pulse
2) http://www.marketwatch.com/story/us-economy-creates-195000-jobs-in-june-2013-07-05
3) http://www.nahb.org/news_details.aspx?sectionID=134&newsID=16373