US Housing Starts, Building Permits Decline, Miss Forecasts

Highlights

• Building permits declined, but single-family authorizations showed a modest increase.
• Housing starts experienced a decline, particularly in single-family units.
• Despite the decrease in starts, housing completions showed slight growth.

Housing Market Miss

The latest data on the housing market reveals mixed signals for June. Privately-owned housing units authorized by building permits were at a seasonally adjusted annual rate of 1,440,000. Although this represents a decline of 3.7 percent compared to the revised May rate of 1,496,000, it is worth noting that single-family authorizations in June were at a rate of 922,000, showing a modest increase of 2.2 percent from the revised May figure of 902,000. Additionally, authorizations for units in buildings with five units or more were at a rate of 467,000 in June.

Housing Starts Decline

Moving on to housing starts, the numbers indicate a decline. Privately-owned housing starts in June reached a seasonally adjusted annual rate of 1,434,000, which is 8.0 percent below the revised May estimate of 1,559,000. Similarly, single-family housing starts in June were at a rate of 935,000, representing a 7.0 percent decrease from the revised May figure of 1,005,000. The rate for units in buildings with five units or more stood at 482,000.

Housing Completions Positive

Despite the decrease in housing starts, the picture is more positive when it comes to housing completions. Privately-owned housing completions in June reached a seasonally adjusted annual rate of 1,468,000, showing a slight decline of 3.3 percent from the revised May estimate of 1,518,000. However, it is important to note that this figure is 5.5 percent higher than the June 2022 rate of 1,392,000. Single-family housing completions in June were at a rate of 986,000, indicating a 2.8 percent decrease from the revised May rate of 1,014,000. Units in buildings with five units or more were completed at a rate of 476,000.

Market Facing Uncertainties

Looking ahead, the housing market faces some uncertainties. The decline in building permits and housing starts raises concerns about the supply of new housing units, which could potentially impact housing affordability. However, the increase in single-family authorizations and the growth in housing completions provide some reassurance. It will be crucial to monitor the supply and demand dynamics in the coming months to assess the overall health of the housing market.

Short-Term Outlook:  Slight Slowdown in Housing Market

In the short term, the housing market appears to be experiencing a slight slowdown as reflected in the decline in building permits and housing starts. However, the positive growth in housing completions suggests some stability. Traders and investors will closely watch the housing market indicators, looking for signs of a bullish or bearish trend that could guide their investment decisions.