The U.S. Census Bureau and the Department of Housing and Urban Development reported Wednesday morning that new housing starts in June dipped to a seasonally adjusted annual rate of 1.17 million, a decrease of 12.3% from the downwardly revised May rate of 1.34 million and a decrease of 4.2% compared with the June 2017 rate of 1.23 million. The May start-rate was the highest since 2007.
The revision to the May rate dropped by 170,000 new housing starts from the previously reported total. The consensus estimate from a survey of economists expected a June rate of around 1.32 million.
High materials and labor costs are causing builders to be more cautious about new construction. Because they have to charge more for the homes, they worry about raising prices too high for many buyers. Demand remains robust, but high prices could easily turn that around.
Single-family housing starts rose month over month by 86,000 to 858,000 in June. The decrease primarily reflects a month-over-month drop of 46,000 in the Midwest and a decline of 34,000 in the South.
The seasonally adjusted rate of new building permits slipped to 1.27 million, down 2.2% from the May rate of 1.3 million and 3% lower than the May 2017 rate.
Permits for new single-family homes rose from a revised annual rate of 843,000 in May to a seasonally adjusted annual rate of 850,000 in June. The rate dipped 3% year over year.
Multifamily starts for buildings with five or more units decreased by 16.2% year over year in June and fell by 8.7% compared with May. This number is more volatile than the single-family number and has been moving mostly sideways since 2013.
In 2017, 1.202 million housing units were started, up 2.4% compared with 2016 and a 10-year high. An estimated 1.263 million permits were issued in 2017, up 4.7% year over year.
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