Rising construction costs and a growing shortage of skilled labor contributed to housing starts falling further in June, according to the latest report from the U.S. Department of Housing and Urban Development and the U.S. Department of Commerce.
According to the analysis, housing starts fell 0.9% in June 2019 to a seasonally adjusted annual rate of 1.253 million units.
Navy Federal Credit Union Economist Robert Frick said lower mortgage rates are not spurring the home building industry to increase construction, as lack of skilled workers, cheaper material costs and land zoned for building continue to hamstring production.
That being said, the report indicates that single-family production ticked up 3.5% from last month to 847,000 units while multifamily starts came in at a seasonally adjusted annual rate of 396,000 units.
However, single-family completions decreased 1.8% in 2019 to a rate of 870,000, while multifamily starts came in at 283,000 units.
Additionally, permits fell 6.1% in June to a seasonally adjusted annual rate of 1.22 million.
Despite this decline, single-family authorizations increased 0.4% from last month’s rate to 813,000 permits and multifamily permits came in at an annualized rate of 360,000.
"In June, the industry dropped on all three major metrics: building permits, housing starts and housing completions,” Frick said. “Given the relatively high price of new homes as well as the lack of supply, the dream of homeownership continues to be out of reach for millions of Americans.”
“Currently, the rate of new homes coming to market, at about 1.2 million annually, is a quarter of a million shy of demand given population growth and historical averages,” Frick said. “The market is currently not equipped to meet demand, so it might take a concerted effort by governments to widen the bottlenecks that are restricting new home building if the problem is going to be addressed quickly."