Eye On Housing
According to estimates from the U.S. Housing and Urban Development and Commerce Department, single-family starts improved in June, consistent with the recent stabilization of the NAHB/Wells Fargo Housing Market Index (HMI). Single-family starts increased 3.5% to a 847,000 seasonally adjusted annual pace in June. However, total housing starts were down approximately 1% (1.253 million annual rate) due to a decline in apartment construction. Multifamily starts declined 9.2% to a still strong 406,000 annualized rate after an elevated reading in May.
On a year-to-date basis, single-family starts are 4.9% lower than the first six months of 2018. NAHB’s forecast, and the forward-looking HMI suggest that future data will show stabilization followed by slight gains due to recent declines in mortgage interest rates. However, single-family permits continued to be soft, with just a slight increase to a 813,000 annualized rate. Single-family permits are down 6.1% on a year-to-date basis. However, the number of single-family units authorized but not under construction declined in June to 85,000 units, down from 90,000 a year ago and a potential signal of additional permit growth ahead. Single-family units authorized but not under construction reached a recent high of 103,000 in December.
We expect additional single-family growth, as areas beyond the exurbs respond to for-sale housing demand and ongoing healthy labor markets. The next quarterly edition of the HBGI will report on such conditions.
On a regional and year-to-date basis, single-family starts are down 13.6% in the Northeast, 13.4% in the West, 8.3% in the weather-challenged Midwest (but improving) and up 1% in the South – the only region with net gains.
As of June 2019, there were 519,000 single-family homes under construction. This is roughly flat from a year ago. However, there are currently 616,000 apartments under construction, the highest count since April 2017. The cumulative impact of recent declines in current construction activity are seen in the graph below. This impact is responsible for a slight decline in housing’s share of GDP.
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