Home Construction Picked Up in June. Multifamily Housing Is Why.
Home Construction Picked Up in June. Multifamily Housing Is Why.
In June, US housing starts increased by 3% to an annualized rate of 1.35 million, primarily due to a significant 19.6% rise in multifamily construction.
Single-family: Government data released Wednesday shows that single-family housing starts to fall by 2.2%, reaching an annual rate of 980,000 units. Despite this decline, single-family starts have increased by 16.1% year-to-date in 2024. High mortgage and construction loan interest rates have dampened single-family production and demand.
Building permits: Overall, residential building permits rose by 3.4% to an annualized rate of 1.45 million units in June. Single-family permits decreased by 2.3%, while multifamily permits surged by 15.6% to an annualized pace of 512,000 units. Homebuilder confidence hit a yearly low amid high mortgage rates and weak demand, prompting builders to offer incentives and cut prices.
Completions: Multifamily completions hit a seasonally adjusted annual rate of 673,000 in June, the highest since May 1986. However, the total number of units under construction decreased, with single-family homes down by 1.3% and multifamily units by 1.6%. The number of multifamily units under construction is at its lowest since August 2022.
➥ THE TAKEAWAY
Big picture: Multifamily projects are buoying the housing market, while single-family construction faces headwinds from high mortgage rates and affordability issues. Despite this, builders have a more optimistic six-month sales outlook, anticipating lower rates as inflation eases.
