The Census Bureau issued a downbeat report on monthly housing starts today.
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 911,000. This is 7.5 percent (±1.0%) below the revised May rate of 985,000, but is 16.1 percent (±1.7%) above the June 2012 estimate of 785,000. Single-family authorizations in June were at a rate of 624,000; this is 0.6 percent (±1.2%)* above the revised May figure of 620,000. Authorizations of units in buildings with five units or more were at a rate of 261,000 in June.
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 836,000. This is 9.9 percent (±11.4%)* below the revised May estimate of 928,000, but is 10.4 percent (±14.9%)* above the June 2012 rate of 757,000. Single-family housing starts in June were at a rate of 591,000; this is 0.8 percent (±11.0%)* below the revised May figure of 596,000. The June rate for units in buildings with five units or more was 236,000.
HOUSING COMPLETIONS Privately-owned housing completions in June were at a seasonally adjusted annual rate of 755,000. This is 6.3 percent (±14.1%)*above the revised May estimate of 710,000 and is 20.2 percent (±12.3%) above the June 2012 rate of 628,000. Single-family housing completions in June were at a rate of 554,000; this is 1.1 percent (±13.6%)* below the revised May rate of 560,000. The June rate for units in buildings with five units or more was 188,000
The data is below expectations. Bill McBride summarized it well by noting that, in addition to the fact this was a disappointing report, housing starts are up significantly from last year, single-family permits are up presaging continued improvement in single-family starts and starts are well below historical averages which suggests a lot of running room. As usual he has lots of great charts. This one would seem to indicate that multi-family construction might be nearing historical norms and thus poised for some cooling off (Click here for larger picture).
There’s some talk about that rising rates are crimping things. I don’t buy it. Rates are still ridiculously low even given the recent increase and prices are still relatively cheap. Financial pundits tend to bemoan the penchant for Americans to save via their homes as opposed to buying financial assets but they’re pushing against an ingrained bias in favor of home ownership. I don’t think this has changed all that much from generation to generation though the onset of buying might be later for the younger cohorts as they are staying in school longer. The various studies which purport to show a trend towards renting simply cover too short a time frame to convince me that it represents a fundamental change in preferences.
As they say, we shall see. In the meantime, I suspect that we’ll continue to claw our way upward on housing starts but not generate any earth shaking numbers. Just one more segment of the economy which is getting better but not helping to put things on the path we would like.