(Bloomberg) -- U.S. new-home construction fell in June for a second month as a drop in apartment building outweighed a pickup in single-family projects.
Residential starts declined 0.9% to a 1.25 million annualized rate, the slowest in three months, according to government figures released Wednesday. Permits, a proxy for future construction, dropped 6.1% to a 1.22 million rate, also reflecting a slump in applications to build multifamily units.
Key Insights
- Single-family starts advanced 3.5% to an annualized rate of 847,000, and permits edged up 0.4% to 813,000.
- The figures on one-family home construction signals the sector is relatively stable as lower borrowing costs and more subdued price appreciation make homeownership more affordable. Home construction hasn't contributed to economic growth since the fourth quarter of 2017. A report Tuesday showed homebuilder sentiment increased in July amid solid demand for single- family homes and prospective buyer traffic.
- Starts of multifamily homes, a category that tends to be volatile and includes apartment buildings and condominiums, slumped 9.2%, and permits plunged 16.8%.
- Fed Chairman Jerome Powell addressed the issue last week when he told lawmakers homebuilders are being held back by a “series of factors” including higher material costs, a skilled-labor shortage, and President Donald Trump's tariff and immigration policies in a congressional hearing last week.
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- Two of four regions posted an increase in housing starts last month, led by a 31.3% rise in the Northeast and a 27.1% advance in the Midwest. New construction declined 9.2% in the South and 4.9% in the West.
- About 165,000 homes were authorized but not yet started, the fewest in a year, indicating builders have less of a backlog.
- The report, produced jointly by the U.S. Census Bureau and the Department of Housing and Urban Development, has a wide margin of error, with a 90% chance that the headline figure was between an 8.8% decline and 7% gain.
--With assistance from Chris Middleton.
To contact the reporter on this story: Reade Pickert in Washington at epickert@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince Golle
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