US housing starts pick up in June, but details weak

Homebuilding activity in the US picked up last month, but the details of the report were not as strong as it might appear at first hand.

According to the Department of Commerce, in seasonally adjusted terms the number of housing starts grew at a month-on-month pace of 3.0% in June to reach an annual rate of 1.353m.

Economists had forecast 1.31m.

However, starts on single-family houses fell by 2.2% to 980,000 as opposed to a 22% surge to 360,000 in those for 5 units or more.

Starts fell by 2.9% on the month in the Northeast and by 10.2% in the West, but in the Midwest they edged up by 0.9% and in the South by 0.5%.

In parallel, the number of permits issued for new home construction jumped by 3.4% over the month to reach 1.446m (consensus: 1.39m), but those for single-family homes dropped by 2.3%.

Figures for starts and permits in May were both revised higher too, from 1.277m to 1.314m and from 1.386m to 1.399m, respectively.

"Conversely, single-family starts fell 2.2% m/m, with the fifth consecutive monthly decline in single-family permits pointing to further weakness ahead," analysts at Capital Economics said.

"This strengthens the argument that homebuilders are hesitant to start new projects given the large build up of new homes for sale, which represents 9.3 months of supply at the current sales rate – the highest since November 2022."