Last Update: 17-Jul-15 09:05 ET
- Housing starts increased 9.8% in June from an upwardly revised 1.069 mln (from 1.036 mln) in May to 1.174 mln. The Briefing.com Consensus expected housing starts to increase to 1.120 mln.
- At first glance, the jump in starts looks impressive. Construction levels nearly recovered everything that was lost after rising to 1.190 mln in April, which was the most starts since November 2007.
- However, the entire increase in starts in June came from the volatile multifamily construction sector. Single-family housing starts declined 0.9% to 685,000 from 691,000 in May. With the exception of a 6.8% gain in the South, single-family starts declined in every other geographic region.
- Multifamily construction increased 29.4% to 489,000 in June from 378,000 in May. That was the most new multifamily construction since 501,000 units were started in April 1988.
- Given such a historic high in a volatile sector, a substantial, but natural, pullback in housing will likely occur in July.
- The number of homes under construction increased 0.9% to 884,000 in June from 876,000 in May. The impact on GDP, however, will be limited. Like the distribution in the number of new housing starts, nearly all of the increase in the number of units under construction came from the multifamily sector. Construction spending is lower on a per unit basis in the multifamily sector. That means the amount of money spent on construction in June will likely be smaller than if the gains came from the single-family sector.
- Construction trends have recovered following the unusually cold winter and are back on their late 2014 accelerated pace.