Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,174,000, up 9.8% (±19.9%) above the revised May estimate of 1,069,000 and is 26.6% (±19.6%) above the June 2014 rate of 927,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

Most of the gains in starts and permits were in multifamily, not single-family contruction.

But the problem is single-family housing starts in June were at a rate of 685,000, 0.9% (±11.5%) below the revised May figure of 691,000. The June rate for units in buildings with five units or more was 476,000.

“While the rise in housing starts was driven by an uptick in multifamily housing, there are positive signs looming for the single-family housing market,” said Bill Banfield, vice president at Quicken Loans. “Homebuilder confidence is at its highest level in almost a decade and the number of first-time homebuyers looking to enter the market is increasing – making programs like FHA even more vital to support continued growth.”

Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,343,000. This is 7.4 % (±1.2%) above the revised May rate of 1,250,000 and is 30.0 % (±2.3%) above the June 2014 estimate of 1,033,000.

“Housing construction has nearly returned to pre-recessionary levels, as builders ramped up activity on multi-family projects including condos and co-ops,” said Stifel Chief Economist Lindsey Piegza. “While builders and lenders benefit regardless of the type of construction, the economic benefit, however, is significantly greater from single family construction as opposed to multi-family units, particularly rental properties; single family housing activity results in additional spending and borrowing power as a result of equity building which is not necessarily present in multi-family properties.

“The housing market continues to take steps in the right direction, however, growth remains far from robust; as we have seen in the recent decline in retail sales, consumers continue to struggle to afford purchases – particularly large ticket items – amid stagnant income growth,” she said. “Still, with the threat of rising rates on the near horizon, some homeowners are jumping in to lock in low rates. As we saw during the taper tantrum of 2013, despite a still-sluggish ability to finance a home purchase, many potential homeowners are willing to jump into the market sooner than later if it means avoiding a significantly higher mortgage rate.”

Single-family authorizations in June were at a rate of 687,000; this is 0.9 % (±1.1%) above the revised May figure of 681,000. Authorizations of units in buildings with five units or more were at a rate of 621,000 in June.

Some observers were more optimistic in their read of the starts numbers.

“Up, up and away…” – Superman’s oft-quoted, turbo-charging comment to self may become the mantra of builders these days is how Chief Economist Jonathan Smoke characterized the June 2015 Housing Starts data released this morning.  

“An increasing level of new construction is the primary way that the housing market will find balance in this surging demand, but tight supply environment.  Both home prices and rents are rising at well above normal levels, and that market signal is exactly what builders and developers need to find confidence to pull permits and start new construction,” Smoke said.

“Given strong demand and tight supply, we expect permits and starts to continue to post gains throughout the year following continued strength in traffic and sales,” Smoke said. “We expect single family starts for 2015 to end above 710,000, which would mean a stronger second half of the year. Total starts this year should end close to 1.14 million, an increase of 14% over 2014.”

Likewise, Nationwide Chief Economist David Berson noted the single-family numbers were still good despite being down for the month.

“Single-family starts edged down slightly (less than 1%), and for the quarter averaged 704 thousand units — the fastest pace since the beginning of 2008.,” Berson said. “Still, two small drops in a row is disappointing given the rise in new home sales.  It may be that builders are having a difficult time getting lots to build on — acquisition and development opportunities are clearly harder to finance today than they were before 2008.

“As has been the case for some time, the volatility in starts (both up and down) came from multifamily units — up in June by 29.4% to an annualized rate of 489,000 units (the strongest pace since 1988…and using quarterly data to remove some of the inherent volatility of monthly numbers, the annualized pace of 441,000 units is the strongest since 1989),” Berson said.

Privately-owned housing completions in June were at a seasonally adjusted annual rate of 972,000. This is 6.7 % (±11.8%) below the revised May estimate of 1,042,000, but is 22.0 % (±14.8%) above the June 2014 rate of 797,000.

Single-family housing completions in June were at a rate of 647,000; this is 0.3 % (±9.3%) below the revised May rate of 649,000. The June rate for units in buildings with five units or more was 317,000.

Housing starts fell in May after last month’s double-digit gain, but at the same time there was a big push in permits for future construction – a surge taking permits to near the highest its been since late 2007.

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