Single-family housing starts were down 6.5 percent for the month to a pace of 1.486 million units, a 13.8 percent drop from June 2005. Multifamily housing construction was up 0.3 percent for the month to a seasonally adjusted pace of 364,000 units.
"NAHB's surveys of single-family builders have been showing a steady decline in confidence since the middle of last year, and builders are acting accordingly. They are slowing their production as market conditions and demand cool down," said David Pressly, president of the National Association of Home Builders (NAHB).
"The June declines in single-family starts and permits clearly show that the housing downswing still is underway, a pattern consistent with our signals from the field," said David Seiders, NAHB's chief economist. "Builders are reporting not only systematic declines in home sales, but also increases in sales cancellations and inventories - due to eroding affordability conditions as well as a withdrawal of investors/speculators from the market."
Three of four regions reported decreases in housing starts for the month. Construction of new homes and apartments was down 11.5 percent in the Northeast, 4 percent in the South, and 10.2 percent in the West. Housing starts increased 3 percent in the Midwest in June following a large decline the previous month.
Issuance of total building permits decreased 4.3 percent in June to a seasonally adjusted annual rate of 1.862 million units, 14.9 percent below the pace of a year ago. Single-family permit issuance was down 6.3 percent on a national basis to a pace of 1.395 million units for the month, reflecting declines in all regions of the country. The pace of multifamily permit issuance was up 2 percent to a pace of 467,000 units, although this level was 6.2 percent below a year earlier.
"In view of the obvious downward momentum in the housing sector, as well as the considerable downside risks that lie ahead, the Federal Reserve should proceed with great caution as it manages monetary policy in the months ahead," said Seiders.
Publication date: 07/17/2006