Builders
started construction of privately-owned housing units
in June at a seasonally adjusted annual rate (SAAR) of 1,434,000 units (1.480
million expected).
This is 8.0% (±10.3%)* below the revised May estimate of
1,559,000 (originally 1.631 million units) and 8.1% (±9.2%)*
below the June 2022 SAAR of 1,561,000 units; the not-seasonally adjusted YoY
change (shown in the table above) was -7.7%.
Single-family
housing starts in June were at a SAAR of 935,000; this is 7.0% (±11.7%)* below the revised May figure of 1,005,000 units (-6.7% YoY).
Multi-family: 499,000 units (-9.9% MoM; -9.6% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,468,000. This is 3.3% (±9.7%)*
below the revised May estimate of 1,518,000 (originally 1.518 million units),
but 5.5% (±11.0%)* above the June 2022 SAAR of 1,392,000 units;
the NSA comparison: +4.4% YoY.
Single-family completions were at a SAAR of 986,000; this is 2.8% (±10.2%)* below the revised May rate of 1,014,000 units (-3.4% YoY). Multi-family: 482,000 units (-4.4% MoM; +24.1% YoY).
Total
permits were at a SAAR of 1,440,000 units (1.483 million expected). This is 3.7% below the revised May rate of 1,496,000 (originally 1.491 million
units) and 15.3% below the June 2022 SAAR of 1,701,000 units; the NSA
comparison: -15.9% YoY.
Single-family permits were at a SAAR of 922,000; this is 2.2% above the revised May figure of 902,000 units (-2.3% YoY). Multi-family: 518,000 units (-12.8% MoM; -34.5% YoY).
Press
release from NAHB’s Robert Dietz:
“Low
existing inventory that is keeping demand solid for new homes helped to push builder
confidence up in July even as the industry continues to grapple with rising
mortgage rates, elevated construction costs and limited lot availability.
“Builder
confidence in the market for newly built single-family homes in July posted a
one-point gain to 56, according to the National Association of Home Builders
(NAHB)/Wells Fargo Housing Market Index (HMI). This is the seventh straight
month that builder confidence has increased and marks the highest level since
June of last year.
“The
lack of resale inventory means prospective home buyers who have not been priced
out of the market continue to seek out new construction in greater numbers. At
the same time, builders are troubled over rising mortgage rates approaching 7%
and continue to grapple with supply-side challenges, including ongoing scarcity
of electrical transformer equipment and growing concerns about lot
availability.
“Although
builders continue to remain cautiously optimistic about market conditions, the
quarter-point rise in mortgage rates over the past month is a stark reminder of
the stop and start process the market will experience as the Federal Reserve
nears the end of the ongoing tightening cycle.
“Given
that shelter inflation accounts for roughly 40% of the Consumer Price Index, the
best way to ease this largest source of inflationary pressure is to build
additional for-rent and for-sale housing. There has been some commentary
linking gains for housing construction with increased concerns for additional
inflation, but this has the economics backwards. More housing supply is good
news for future shelter inflation readings in the market. Furthermore, higher
interest rates increase the cost of financing for building homes and developing
lots.
“The
July HMI survey also revealed that despite elevated interest rates, builders’
use of sales incentives has declined, as the market has firmed and resale
inventory options remain limited. Only 22% of builders report cutting prices in
July. This is down from 25% in June and 27% in May.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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