New Construction of Single-Family Homes Goes Stagnate

The U.S. Census Bureau and the Department of Housing and Urban Development today jointly released New Residential Construction survey statistics for June 2010.

Housing Starts data estimates how much new residential real estate construction occurred in the previous month. New construction means digging has begun. Adding rooms or renovating old ones does not count, the builder must be constructing a new home (can be on old foundation if re-building). Although the report offers up single family housing, 2-4 unit housing, and 5 unit and above housing data, single family housing is by far the most important as it accounts for 70-80% of total home building.

Building Permits data provides an estimate on the number of homes planning on being built. This indicator basically tracks how much future construction activity we should expect to take place in the future. This data is a part of Conference Board's Index of Leading Economic Indicators.

Excerpts taken from the official release...

BUILDING PERMITS: Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 586,000. This is 2.1 percent above the revised May rate of 574,000, but is 2.3 percent below the June 2009 estimate of 600,000. BETTER THAN EXPECTED

Single-family authorizations in June were at a rate of 421,000; this is 3.4 percent below the revised May figure of 436,000. Authorizations of units in buildings with five units or more were at a rate of 145,000 in June. 

HOUSING STARTS: Privately-owned housing starts in June were at a seasonally adjusted annual rate of 549,000. This is 5.0 percent below the revised May estimate of 578,000 and is 5.8 percent  below the June 2009 rate of 583,000. WORSE THAN EXPECTED

Single-family housing starts in June were at a rate of 454,000; this is 0.7 percent below the revised May figure of 457,000. The June rate for units in buildings with five units or more was 88,000. 

HOUSING COMPLETIONS: Privately-owned housing completions in June were at a seasonally adjusted annual rate of 886,000. This is 26.2 percent above the revised May estimate of 702,000 and is 11.0 percent above the June 2009 rate of 798,000.

Single-family housing completions in June were at a rate of 676,000; this is 31.3 percent above the revised May rate of 515,000. The June rate for units in buildings with five units or more was 202,000.

The table below recaps the data and provides a regional breakdown. The South was the "least worst" performer in terms of housing starts while the Northeast saw the biggest uptick in Building Permits.

After a huge improvement in May, multi-family housing starts led the overall "starts" number lower with a 26,000 unit decline. Single-family starts fell 3,000 units.  In terms of building permits, the multi-family category led the way higher with a 27,000 unit improvement. Single-family permits declined by 15,000 units.

While multi-family building will likely benefit from affordable housing initiatives, both metrics of single-family home new construction (permits and starts) have gone stagnate near record low levels.