Housing starts rebound in June
Housing starts rose 8.3% in June to a seasonally adjusted annual rate of 1.215 million, up from May's upward-revised 1.122 million, the Commerce Department reported Wednesday. June's figure was up 2.1% year-over-year.
Building permit authorizations, an indicator of future construction activity, bounced back in June, rising 7.4% from May's rate of 1.168 million to 1.254 million for the month, and coming in 5.1% above the year-ago mark.
Single-family starts rose 6.3% in June to 849,000, up from May's upward-revised rate of 799,000 and were 10.3% ahead of a year ago. Multifamily climbed 15.4% from May's upward-revised rate of 311,000 to 359,000 starts in June. However, multifamily starts were down 10.7% year-over-year.
June's housing starts report beat expectations, with economists polled by MarketWatch forecasting a rate of 1.16 million. While May's upward-revised numbers and June's rebound in starts suggest that the market is continuing along its path to recovery, the figures come as homebuilder confidence is wavering.
After reaching its highest level since June 2005 in March, an index kept by the National Association of Home Builders and Wells Fargo has seen builder outlook for business opportunities move up and down from month-to-month so far this year in response to headwinds from the lot and labor shortage and rising material prices, even as demand remains strong. The index posted its second-straight month of declining optimism in July.
Material prices and access can be a strain on builders, who struggle to avoid passing on such costs to customers in the form of higher prices.
Recent trade duties on softwood lumber imports from Canada could mean a shortage of the material and, in turn, even higher prices. Twenty-one percent of today's single-family builders report difficult accessing framing lumber, according to the NAHB, compared to the 7% who said the same in July 2015, before the last softwood lumber deal between the U.S. and Canada expired.
- Commerce Department Monthly new residential construction, June 2017
- MarketWatch Housing starts jump as construction, home buying get back on track
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