(July 17): Housing starts in the US surged in June after a sharp drop a month earlier, driven by a rebound in apartment construction.
New residential construction increased 19% last month to an annualised rate of 1.43 million, the highest since March, government data released on Friday showed. That topped all estimates in a Bloomberg survey of economists.
Builders increased multi-family starts by more than 76% to an annual rate of 532,000, following a nearly 40% plunge month earlier. Single-family starts, however, declined 0.2%, slipping again after a generally slow spring season for builders.
The rebound in multi-family construction underscores the volatile nature of monthly housing numbers, especially among apartments. Still, high prices and mortgage rates — factors that have been weighing on demand for single-family homes — could also be supporting apartment demand.
Single-family homebuilders, meanwhile, have generally been confronting elevated inventory and weak demand. That’s forced many to use to sales incentives to attract buyers.
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Looking ahead to future construction, overall building permits decreased 3% to the lowest since March. Permits for one-family homes dropped to a 10-month low, and multifamily applications also declined.
The recently passed 21st Century Road to Housing Act could help builders in the long term, especially developers of build-to-rent communities and makers of factory-built housing, Bloomberg Intelligence analyst Drew Reading said in a note this week. However, it isn’t expected to improve things much in the near term, he said.
“May’s data had been dented by a stall in these larger projects. We anticipated it would prove temporary as builders increasingly focus on bringing smaller, more affordable units to market — but the speed of the recovery far exceeded our expectations,” says Stuart Paul of Bloomberg Economics.
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Prior to the report, the Federal Reserve Bank of Atlanta’s GDPNow forecast showed residential investment making only a marginal contribution to second-quarter gross domestic product.
Housing starts rose across the US. In the South, the nation’s biggest homebuilding region, they increased 15.2%, driven by multi-family construction. Building in the Midwest reached the highest since 2024.
The new residential construction data are volatile, and the government report showed 90% confidence that the monthly change ranged from a 3.1% gain to a 34.9% jump.
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