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June Housing Starts Top Views Amid Sharp Multi-Family Gains

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June Housing Starts Top Views Amid Sharp Multi-Family Gains

US housing starts increased more than expected last month amid a sharp jump in multi-family projects, government data showed Friday.

Starts climbed 19% sequentially to a seasonally adjusted annual rate of 1.43 million units in June, according to the Census Bureau and the Department of Housing and Urban Development. The consensus was for an 11% gain in a survey compiled by Bloomberg.

The revised figure for May's housing starts was nearly 1.2 million, according to the data.

"Homebuilding activity saw a strong rebound in June as the volatile multi-family segment retraced the sharp decline recorded in May," TD Economics Economist Andrew Foran said in a note. "Despite the volatility, multi-family starts have continued to rise gradually over the past two years as the number of units under construction normalized from its prior post-pandemic high."

Starts on buildings with at least five units surged 76% month on month to 513,000 units in June, official data showed. The single-unit component edged down 0.2% to 895,000 units.

"Single-family starts remain below their 2024 pace as affordability challenges and elevated inventories of new homes continue to weigh on builder activity," according to Foran.

Building permits, which is a forward-looking indicator of homebuilding, decreased 3% to 1.37 million units last month, while Wall Street expected an increase of 0.1%. Authorizations of buildings with five or more units dropped 4.9%, while those with single units were down 2.4%, according to the report.

"Homebuilding conditions remain challenging as financing rates have returned to an upward trajectory following the resumption of geopolitical tensions in the Middle East," Foran said. "Financial markets currently expect at least one interest rate hike by year-end, which is likely to keep mortgage rates close to their current level through year-end."

The National Association of Home Builders and Wells Fargo said Thursday that homebuilder confidence in the US deteriorated in July amid growing material prices, high land costs and elevated mortgage rates.

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