US single-family starts drop; building permits hit 12-month high

investing.com:

By Lucia Mutikani

WASHINGTON (Reuters) — U.S. single-family homebuilding fell in June, but permits for future construction rose to a 12-month high as a severe shortage of previously owned houses for sale supports new construction.

The decline in housing starts reported by the Commerce Department on Wednesday partially retraced an abnormally large 18.7% surge in May, which had pushed groundbreaking on single-family housing projects to an 11-month high.

Builders' efforts to ramp up construction are, however, being frustrated by shortages of materials like electrical transformer equipment as well as higher borrowing costs. Housing completions fell last month and the stock of single-family homes under construction was the lowest in two years.

«The level of single-family starts remains robust, and we believe ongoing near-term strength is likely given the continued upward trend in permits,» said Mark Palim, deputy chief economist at Fannie Mae in Washington.

«If the economy continues to expand in the coming quarters, we think starts are capable of moving toward an annualized pace of 1 million units as demand remains sufficient given the ongoing lack of existing homes available for sale.»

Single-family housing starts, which account for the bulk of homebuilding, dropped 7.0% to a seasonally adjusted annual rate of 935,000 units last month. Data for May was revised higher to show starts vaulting to a rate of 1.005 million units, the highest level since June 2022, instead of 997,000 units as previously reported. May homebuilding was likely boosted by unseasonably warmer and drier weather.

In June, single-family homebuilding fell in the Northeast, Midwest as well as the densely populated South, but jumped 4.6% in the West.