In June, the number of new housing starts in the United States increased to 1.35 million units, with a sharp increase in multi-family residential construction overshadowing the sluggishness in single-family home starts
The number of new housing starts in the United States increased to 1.35 million in June, but the single-family housing start rate fell to an 8-month low, indicating that the real estate market is facing challenges from high interest rates. Builder confidence declined, inflation cooled, and there is hope for a rate cut by the Federal Reserve. Builders are stimulating sales through price cuts and incentives, leading to the total housing completion reaching the highest level since 2007. New housing start data fluctuates significantly, with 90% of people believing that the monthly change is between a decrease of 7.5% and an increase of 13.5%
According to the financial news app Zhitong Finance, data released by the U.S. government on Wednesday showed that driven by a 19.6% surge in multi-family housing construction, the total annualized rate of new home construction in the United States in June increased by 3% to 1.353 million units. Single-family home construction rates have declined for the fourth consecutive month.
Although new home construction in the United States increased in June, the start of single-family homes fell to an 8-month low, highlighting the challenges faced by the real estate market due to high interest rates.
Building permits, which reflect future construction activity, increased by 3.4% year-on-year to 1.45 million units, also driven by an increase in applications for multi-family housing projects.
Single-family home authorizations decreased by 2.3%, the lowest pace in over a year.
The strong momentum in single-family home construction at the end of last year is fading. The report also shows that the number of homes under construction has dropped to the lowest level since early 2022, indicating that builders are focusing on aligning inventory with demand.
Prior to the release of this report, the Atlanta Fed's GDPNow forecast indicated that residential investment in the second quarter would decline by 2.8% on an annualized basis.
Decline in Builder Confidence
Builder confidence is also declining, with the latest builder confidence index compiled by the National Association of Home Builders and Wells Fargo Bank currently at a yearly low.
A recent inflation report revealed that overall economic price increases are cooling down, and the industry is hoping that the Federal Reserve will soon begin cutting interest rates. Mortgage rates have been hovering around 7% for several months.
Builders have been trying to stimulate sales by lowering prices and offering incentives, such as reducing clients' mortgage rates. According to the NAHB report, 31% of builders lowered prices in July, up from 29% in June.
A report from the U.S. Department of Commerce also shows that total housing completions surged by 10.1% to reach the highest level since 2007, primarily driven by a significant increase in multi-family housing projects.
New home construction data fluctuates significantly, with government reports indicating that 90% of people believe that monthly changes range from a 7.5% decrease to a 13.5% increase