WASHINGTON - In the latest sign that the housing market remains in a correction phase, housing starts rose 2.3 percent in June to a seasonally adjusted annual rate of 1.467 million following downward revisions for the previous two months, according to figures from the U.S. Department of Commerce. However, building permits, which are considered an indicator of future building activity, were down sharply last month for both single-family and multifamily construction.
"The small overall increase in total housing starts does not signal the end of the housing downswing," said David Seiders, chief economist for the National Association of Home Builders (NAHB). "All of the gain occurred on the multifamily side, which is subject to sizeable month-to-month volatility, and single-family starts actually registered a slight decline following downward revisions to both April and May. Looking toward future single-family production, permit authorizations fell to their lowest level since December of 1996 and now stand 43 percent below the recent peak in the fall of 2005.
"In view of current market challenges, we expect to see further erosion in housing starts during the second half of this year. However, we expect to see signs of stabilization by the end of this year and we're projecting a gradual recovery process in 2008."
Starts of new single-family homes slipped by 0.2 percent during June to a seasonally adjusted annual rate of 1.151 million units, 21.6 percent below a year earlier.
Multifamily housing starts, on the other hand, increased 12.5 percent during the month to a seasonally adjusted annual rate of 316,000, which was 9.7 percent below the rate of June 2006.
Total building permits fell 7.5 percent in June to a seasonally adjusted annual pace of 1.406 million units and were down 25.2 percent from a year earlier.
Single-family permit issuance last month fell 4.1 percent to 1.019 million units, 27.5 percent below a year earlier, while multifamily permits declined 15.3 percent to 387,000 units, which was 18.4 percent below the annual rate set in June 2006.
Regionally, starts of new homes and apartments in June were up 9 percent in the West and 2.4 percent in the South, following sharp declines in May. Starts were down 3.7 percent in the Midwest and 2.4 percent in the Northeast. All four regions experienced a construction pace that was down substantially from a year earlier.
Housing Starts Up Slightly in June but Permits Down Sharply
July 23, 2007