In a recent report released by the Commerce Department, it was revealed that housing starts in the United States experienced a decline in June. The decrease was primarily driven by a drop in multi-family construction, while building permits also saw a decline. Here are the key takeaways from the report:
Housing Starts Decrease
Housing starts, which serve as a measure of homebuilding activity in the U.S., fell by 8% in June. The seasonally adjusted annual rate of housing starts was recorded at 1.43 million. According to economists polled by The Wall Street Journal, the expectation was for a slightly larger decrease of 9.3%, with a projection of 1.48 million housing starts for the month.
Compared to the same month last year, housing starts were down by 8.1%. The main driver behind this decline was the more volatile multi-family projects segment, which experienced an 11.6% decrease on a monthly basis. Single-family projects also decreased, albeit to a lesser extent, with a 7% drop.
It is worth noting that the initial estimate for May’s housing starts was revised downwardly from 1.63 million to 1.559 million.
Volatility of Monthly Housing Starts Data
When analyzing monthly housing starts data, it is important to consider its volatility. The June data comes with a significant margin of error of 10.3 percentage points. This means that the actual figures could differ by this amount.
Decline in Residential Permits
Residential permits, which can provide insight into future home construction, experienced a decline of 3.7% in June compared to the previous month. The seasonally adjusted annual rate of residential permits was recorded at 1.44 million. Economists had expected a smaller decline of 0.7% for the month.
Positive Sentiment Among Home Builders
In contrast to the decline in housing starts and residential permits, there was positive news regarding home builder sentiment. Data from the National Association of Home Builders showed that sentiment among home builders rose for the seventh consecutive month in July.