Single-family starts decline in June but permits post solid gain

Single-family production fell back after four straight monthly gains as elevated construction costs and rising mortgage rates led to a reduction in home building activity and affordability conditions worsened for home buyers.

Overall housing starts in June decreased 8% to a seasonally adjusted annual rate of 1.43 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The June reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 7% to a 935,000 seasonally adjusted annual rate. Single-family starts are also 7.4% lower than a year ago. The multifamily sector, which includes apartment buildings and condos, decreased 9.9% to an annualized 499,000 pace.

“Housing starts posted a monthly decline in June as tightening monetary policy helped push mortgage rates up more than a quarter-point over the past month,” said Alicia Huey, NAHB chairman. “Policymakers need to remove regulatory bottlenecks that impede the housing industry’s ability to increase the production of quality, affordable housing.”

“While builders have slowed construction activity as interest rates have approached 7%, we anticipate mortgage rates will stabilize later this year in anticipation of the end of Federal Reserve’s tightening cycle,” said Danushka Nanayakkara-Skillington, NAHB’s assistant