New home construction increased in June as builders focused on expanding multifamily projects.
Housing starts rose 3% to a seasonally adjusted annual rate of 1.35 million, Census Bureau data released Wednesday, with multifamily construction driving last month’s increase. The number of new homes with five or more units rose to a seasonally adjusted annual rate of 360,000, from 295,000 in the previous month.
“The increases in housing starts and building permits in June are not as encouraging as they may appear, driven by gains in the volatile multifamily housing sector that are likely to be temporary,” Thomas Ryan, an economist at Capital Economics, wrote after the release.
However, single-family home starts and permits were down 2.2% and 2.3%, respectively, from the previous month. This marks the fifth consecutive month of declines in single-family home permits, signaling further weakness ahead.
Mr Ryan added: “The decline reflects claims that housebuilders are hesitant to commence new projects in light of the large build-up of new homes, the highest since November 2022, equivalent to 9.3 months’ supply at current sales rates.”
Homebuilding stocks lost steam Wednesday following the latest government data. The SPDR S&P Homebuilders ETF (XHB) fell 0.66%. DR Horton, Inc. (DHI), the largest U.S. homebuilder, lost 0.6%, while Lennar (LEN) and Toll Brothers (TOL) were down 0.6% and 0.5%, respectively, in morning trading.
