Building Permits and Starts Surpass Forecasts in June

U.S. Housing Market Shows Mixed Signals in June

June’s residential construction data reveals a complex picture of the U.S. housing market, with some indicators surpassing expectations while others point to ongoing challenges.

Building Permits Exceed Forecast

Building permits for privately-owned housing units reached a seasonally adjusted annual rate of 1,446,000 in June, surpassing the forecast of 1.40 million. This represents a 3.4% increase from May’s revised rate of 1,399,000. However, it remains 3.1% below the June 2023 level, indicating a year-over-year slowdown in planned construction.

Housing Starts Beat Expectations

Housing starts in June also exceeded predictions, coming in at a seasonally adjusted annual rate of 1,353,000 compared to the forecast of 1.30 million. This marks a 3.0% increase from May’s revised estimate of 1,314,000. Despite this month-over-month gain, starts are still 4.4% lower than June 2023, suggesting a tempered pace of new construction compared to last year.

Completions Surge

The most notable development in June’s report is the significant rise in housing completions. At a seasonally adjusted annual rate of 1,710,000, completions jumped 10.1% above May’s revised estimate and soared 15.5% higher than June 2023. This surge in finished homes could help alleviate some of the supply constraints in the housing market.

Single-Family Sector Shows Weakness

While overall numbers improved, the single-family sector displayed signs of weakness. Single-family housing starts decreased by 2.2% from May, and single-family authorizations dropped 2.3%. This suggests potential headwinds for this crucial segment of the housing market.

Market Forecast

Based on these mixed signals, the short-term outlook for the U.S. housing market leans cautiously bullish. The unexpected strength in building permits and housing starts, coupled with the surge in completions, indicates resilience in the face of high interest rates. However, the weakness in the single-family sector and year-over-year declines in permits and starts warrant careful monitoring. Traders should watch for potential market reactions to this data, particularly in homebuilder stocks and related sectors.