Following the lessening of coronavirus lockdowns, along with potential homeowners exiting metro markets, the residential construction industry continues its climb to higher ground.
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1.186 million, rising 17.3% above the revised May estimate of 1.011 million starts, the Commerce Departement reported this morning. The latest figures are 4% below the June 2019 rate of 1.235 million, however.
Single-family starts in June jumped 17.2% to 831,000 from the revised May rate of 709,000. Multifamily starts, including apartment buildings and condos, increased 17.5% to 355,000.
“Fueled in part by record low mortgage rates, builders are seeing solid demand for housing despite the challenges of the virus and elevated unemployment,” said NAHB Chairman Chuck Fowke. “Demand is growing in lower density markets, including exurbs and small metros.”
Permits also gained, with authorizations in June growing 2.1% to a rate of 1.241 million from the revised May rate of 1.216 million. In comparison to a year ago, the latest report is down 2.5% from a rate of 1.273 million in June 2019.
“The housing market is hot,” said Lawrence Yun, chief economist of the National Association of Realtors. “Homebuyers have swiftly moved into the market to take advantage of the unimaginably low mortgage rates.”
Single-family permits in June are at 834,000, climbing 11.8% above the revised May rate of 746,000. Multifamily permits decreased 13.4% to a 407,000 pace.
“Single-family construction is expanding off April lows due to lean inventories of new and existing homes,” said NAHB Chief Economist Robert Dietz. “However, builders face challenges in growing costs, particularly rising prices for lumber.”
Yun says there is even more room for growth in residential construction in the months to come.
“Inventory is lacking with a sizable backlog of buyers getting outbid by others,” he said. “More homes therefore need to be built to help relieve the housing shortage.”