Single-Family Starts Bounce Back in June


Total housing starts bounced back in June after a weak May. Total starts increased 8.3% to a  1.215 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD. Monthly increases were recorded for both single-family and multifamily development.

Single-family starts moved forward, increasing to an 849,000 annual rate in June. The February annualized rate, 877,000, was the fastest monthly pace since the Great Recession. Single-family starts are up 8% year-to-date compared to 2016 as limited existing inventory and solid builder confidence make for positive market conditions for additional building. This is right in line with forecast despite some monthly noise in the data.

Single-family permits were up 4% in June. On a year-to-date basis, single-family permits are almost 11% higher compared to this time in 2016.

As measured on a three-month moving average, the data are consistent with recent trends in the NAHB/Wells Fargo measure of single-family builder confidence and NAHB’s forecast of modest single-family construction growth in 2017. The three-month moving average of single-family starts reached a post-recession high in April, and NAHB is forecasting continued growth for the sector as the year progresses. However, due to the strong February number, the rolling average has weakened recently.

Multifamily starts also increased in June, after five consecutive months of decline. Multifamily starts were up 13% in June, but are down 5% on a year-to-date basis. This matches our forecast expecting a small decline in multifamily construction in 2017.

With respect to housing’s economic impact, 57% of homes under construction in June were multifamily (610,000). This multifamily count is almost 5% higher than a year ago, although in recent months this total has flattened. There were 460,000 single-family units under construction, a gain of 7% from this time in 2016.

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