June Housing Starts Slump
Housing Starts slowed down in June, while Retail Sales were on the rise.
June Housing Starts fell 12.3 percent from May to an annual rate of 1.173 million units, versus the 1.318 million expected. This was the lowest level since September 2017, as Housing Starts fell in all four major regions of the country. Starts were down 4.2 percent from June of last year.
June single-family starts, which make up the bulk of residential housing, declined 9.1 percent from May, while essentially unchanged from a year ago. Multi-family dwellings of five or more units dropped 20.2 percent month over month, down 15.3 percent year over year. Building Permits, a sign of future construction, also fell 2.2 percent from May to an annual rate of 1.273 million, below the 1.330 million expected. Building Permits were down 3 percent from a year ago.
Higher costs for lumber, lack of available land and a shortage of construction workers were all factors that led to the slowdown in Housing Starts.
Sales of existing homes also fell in June due in part to high home prices and a low inventory of homes for sale on the market. Existing Home Sales fell 0.6 percent from May to an annual rate of 5.38 million units, the National Association of REALTORS® reported. From June 2017 to June 2018, sales fell 2.2 percent. Inventory of homes for sale on the market was at a 4.3-month supply, well below the 6-month supply seen as normal.
Lawrence Yun, NAR chief economist, said, "The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation's housing market. What is for sale in most areas is going under contract very fast and in many cases, has multiple offers."
Sales of new single-family homes also declined in June, reaching their lowest level since October 2017. June New Home Sales fell 5.3 percent from May to an annual rate of 631,000, the Commerce Department reported. From June 2017 to June 2018, sales rose 2.4 percent. Inventory of new homes for sale fared better than inventory of existing homes in June, with a 5.7-month supply of new homes available.
While Housing Starts and home sales fell in June, the economy showed signs of strength as Retail Sales were up 0.5 percent in June from May, the Commerce Department reported. May's figure was revised sharply higher to 1.3 percent from 0.8 percent. From June 2017 to June 2018, sales rose 6.6 percent. The Retail Sales report is considered the most-timely indicator of broad consumer spending patterns.
At this time, home loan rates remain attractive historically.
If you or anyone you know has questions about home loans, please contact me. I'm always happy to help.