New single-family home construction fell 7% in June after jumping 18.5% in May, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said in a press release. Overall housing starts, which include multifamily dwellings, were down 8% month over month.
Specifically, single-family homes were built at a seasonally adjusted annual rate of 935,000, compared to an upwardly revised pace of 1,005,000 in May. The June rate was down 7.4% from the 1,010,000 pace of June 2022. Multifamily residences, meanwhile, went up at an annual rate of 482,000, compared to 545,000 in May, representing an 11.6% slide. Year over year, the June rate was down 11.2% from 543,000 in June 2022.
Total housing starts were 1,434,000, compared to 1,559,000 in May. This pace was 8.1% slower than the 1,561,000 rate measured in June 2022.
“Builders are benefiting from the lack of resale inventory, but higher mortgage rates pose a threat,” First American Deputy Chief Economist Odeta Kushi said. “Reduced affordability, alongside ongoing supply-side challenges and tighter lending standards for acquisition, development and construction loans, could throttle builder momentum.”
Single-family permits, a leading indicator of future new-home supply, rose 2.2% month over month and fell 2.7% year over year to 922,000 units, while single-family completions slid 2.8% month over month and 2.3% year over year to an annual rate of 986,000.
“Note the steady increase in single-family housing permits, a leading indicator of future housing starts,” Kushi said. “There is a significant shortage in the U.S. housing market, and existing-home supply is insufficient to meet the demand. As a result, builders are stepping up.”