Last Update: 17-Jul-14 08:54 ET
- Housing starts fell 9.3% in June from a downwardly revised 985,000 (from 1.001 mln) in May to 893,000. The Briefing.com consensus expected housing starts to increase to 1.020 mln in June.
- The drop in starts brought new residential construction levels to their lowest point since 863,000 homes were started in September 2013.
- Multi-family construction was running hotter than its 12-month trend and was expected to decline. Those starts fell 9.9% to 318,000 in June from 355,000 in May.
- The bigger concern is the new trend in single-family construction. This sector tends to produce stable trends yet starts have now fallen precipitously in both May (-2.6%) and June (-9.0%). Construction levels for new single-family homes are at their lowest point since 569,000 homes were started in November 2012.
- These large drops seemingly go against the recent improvement in homebuilder sentiment. The July NAHB sentiment reading surpassed the expansion/contraction threshold and increased to 53.
- Not all of the construction numbers were bad. The number of homes currently under construction managed not to decline for the 34th consecutive month and increased 1.1% to 758,000 in June. All of the gain came from the multi-family sector, which contributes less per unit to overall construction spending. Thus, the gain should be positive for GDP, but not as much as if the increase had come predominately from the single-family sector.
- The drop in multifamily construction was expected, but the second consecutive decline in single-family starts is worrisome for future construction growth.