U.S. housing market stuck in a rut despite lower mortgage rates

U.S. housing starts fall further permits at two-year low

US Housing Starts Declined 0.9% in June

But perhaps more telling, permitting activity to start construction, which is a forward-looking metric, dropped 6.1 percent to an annualized rate of 1.220 million units in June, which is down 6.6 percent on a year-over-year basis and a two-year low.

The report from the Commerce Department on Wednesday also showed housing completions at a six-month low and a modest increase in the number of homes under construction, indicating that an inventory squeeze that has haunted the market could persist for a while.

Housing starts decreased 0.9% to a seasonally adjusted annual rate of 1.253 million units last month as a rebound in the construction of single-family housing units was overshadowed by a plunge in multi-family homebuilding, the government said.

"The monthly pick up from May to June in single-family starts is in line with the slight rise in our latest builder confidence survey, as demand remains solid due to a healthy job market", said NAHB Chairman Greg Ugalde, a CT home builder and developer.

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Housing completions were at a rate of 1.161 million, a decrease of 4.8% compared with 1.220 million the previous month and down 3.7% compared with a rate of 1.205 million a year earlier. Permits have been weak this 12 months, with a lot of the decline concentrated within the single-family housing phase. "With the new design contracts score reaching a 33-month low and the project inquiries score hitting a 10-year low, work in the pipeline may start to get worked off, despite current robust backlogs".

"These prints are in line with our view of a slowing housing market that is likely to continue on a downward trajectory for the rest of this year, but with no significant risks of an immediate slump", said Igor Cesarec, an economist at Citigroup in NY. A dearth of affordable land and labor continue to weigh heavily on housing starts, headwinds that sustained low mortgage interest rates and a strong job market haven't overcome.

Permits to construct single-family properties rose 0.4% to a charge of 813,000 models in June. Builders, nonetheless, complained "they proceed to grapple with labor shortages, a dearth of buildable tons and rising development prices which might be making it more and more hard to construct properties at cheap worth factors relative to purchaser incomes". A report July 16 showed homebuilder sentiment increased in July amid solid demand for single- family homes and prospective buyer traffic.

The post June Housing Starts: Still Sluggish appeared first on Zillow Research.

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Starts for the volatile multi-family housing segment dropped 9.2% to a rate of 406,000 units last month. Multifamily permits accounted for the entire decline, plummeting 16.8% to a 407,000-unit pace, its slowest since 2016. Permits for buildings with five units or more were the lowest since March 2016.

June housing completions fell 4.8% from May and 3.7% from June 2018. The inventory of housing underneath development elevated 0.5% to 1.135 million models in June.

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