Following a very strong performance in May, the pace of nationwide housing starts slipped by 3.6 percent in June to a seasonally adjusted annual rate of 1.67 million units, the Commerce Department reported. The June rate was still up by 2.4 percent from a year earlier and exceeded the average pace for 2001 by a wide margin.
“We had expected a modest decline in housing starts for June, and July 17's report actually confirms the continuing health and stability of the nation's housing market. It also indicates that housing continued to provide positive contributions to economic growth in the second quarter,” said Gary Garczynski, president of the National Association of Home Builders (NAHB) and a builder/developer from Woodbridge, Va.
Crediting favorable financing conditions as a major factor fueling demand for new homes, Garczynski said, “The lowest rates on long-term mortgages since the 1960s, along with solid increases in house prices, are making investments in homeownership that much more attractive, and builders are responding to strong home buyer demand.”
Single-family housing starts fell 2.9 percent in June to a 1.35 million-unit rate, equivalent to the robust average monthly rate for the first half of the year. Meanwhile, multifamily starts lost some of the ground they gained in May with a 6.7 percent decline to a 322,000-unit rate in June.
Regionally, overall starts were down across all areas except the Northeast, which posted a 6.1 percent gain. Declines ranged from a less-than-one-percent shortfall in the Midwest to a 2.2 percent dip in the West and a 7.6 percent slowdown in the South.
Housing permits, which can be an indicator of future building activity, offered further evidence of continuing market stability. In June, overall permits rose 1.4 percent to a very strong 1.7 million-unit rate as single-family permits gained 1.7 percent to 1.29 million units and multifamily permits gained 0.7 percent to a healthy 411,000 units. Regional variation in June permit activity resulted in gains of 4.8 percent and 1.5 percent in the South and Midwest and declines of 4.6 percent and 2.2 percent in the Northeast and West, respectively.