Higher June housing starts reverse three-month decline

July 19, 2017

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By Scott Volling

June housing starts came in at 1,215,000, 5% higher than the consensus of 1,155,000 and 2% higher than June of 2016. This is the highest number since February and reverses three straight months of declines.  Permits rose 7% from May to 1,254,000, an additional sign that the 3-month decline in starts from March to May may have been a temporary hiccup in what has been a slow and steady recovery for the industry. The volatile multi-family number came in at 359,000, down over 10% from last year, but up 15% from May.

The increase in starts was fueled by a strong single family number of 849,000, 6% higher than last month and 10% higher than a year ago. We expect to see continued strength in starts, particularly with single family, as builders seek to capitalize on strong demand in the market coupled with a shortage of housing supply. However, we will continue to monitor the impact of affordability concerns, especially in the first time buyer segment. Rising material costs have helped drive the median price of new homes sold in May to an all-time high of $345,800, according to the U.S. Census, which may be an indicator that certain segments of buyers will be priced out of the market and that builders may be limited in their ability to fully capitalize on favorable demand.

 

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