Multi-Family Housing Starts up 28.5%, Single Family Starts Fall 0.9%

The two leading indicators among measures of residential construction activity, building permits and housing starts, posted healthy gains in June the Census Bureau and Department of Urban Development said today.  Both numbers came in above analyst estimates, however gains were concentrated in the multi-family sector; single family numbers were flat. The third measure, housing completions, was down but remained significantly higher than a year earlier.

Bloomberg noted that the unusual rise for multi-family units reflects high levels of rent which were also evident in today's CPI report.

Permits for residential construction were authorized at a seasonally adjusted annual rate of 1,343,000 units, a 7.4 percent increase over May and 30.0 percent above authorizations in June 2014 of 1,033,000.  The consensus estimate for the number was 1,178,000.  May permitting numbers were revised down from the original 1,275,000 units to 1,250,000. 

Permits for single family construction increased from a rate of 681,000 units (revised from 683,000) to 687,000, a gain of 0.9 percent, 6.0 percent higher than a year earlier.  Permits for construction of units in building containing five or more were running at a 621,000 unit rate, an increase of 16.1 percent month-over-month and 79.0 percent on an annual basis.

On a non-seasonally adjusted basis the report estimates there were 134,800 permits issued during the month compared to 111,100 in May.  There were more single family permits issued than multi-family permits - 69,400 to 61,800.

Housing starts, the only metric to fall in May, recovered much of that loss in June, rising by 9.8 percent to a seasonally adjusted annual rate of 1,174,000.  Analysts had projected a rate of 1,125,000 units. The May estimate, which had originally represented an 11.1 percent decline from April, gained a little ground as well, revised upward to 1,069,000 from 1,036,000.  June 2015 housing starts were 26.6 percent higher than the 927,000 rate in June 2014.

Single family starts were estimated at a rate of 685,000, a 0.9 percent dip from the revised (from 680,000) May estimate of 691,000.  Construction was begun on multi-family units at an annual rate of 476,000 units compared to 370,000 units in May, a gain of 28.5 percent and up 55.0 percent year-over-year.

Housing starts, unadjusted, were estimated at 110,400 for the month compared to 99,700 in May.  The starts were split 69,400 for single family and 39,900 for multi-family units.

Housing units were completed at a rate of 972,000 units in June, down 6.7 percent from May's revised estimate of 1,042,000 units (originally reported at 1,034,000).  This was still 22.0 percent higher than the estimates of completions - 797,000 - in June 2014.

Single family completions were at a seasonally adjusted rate of 647,000, down 0.3 percent from the May estimate of 649,000.  Completions of multi-family was estimated at a rate of 317,000, down 386,000 in May (-17.9 percent) but an increase of 53.1 percent from the previous June.

Completions on a non-seasonally adjusted basis were estimated at 87,400 compared to 85,500 in May.

At the end of the reporting period there were an estimated 153,000 permits issued but under which construction had not started, up from 141,000 in May.  Single-family permits in this category numbered 67,000 and multi-family 84,000.

An estimated 884,000 units of housing were under construction at the end of June, up from 876,000 at the end of May.  The lion's share of these, 500,000 were units in buildings with five or more.

Issuance of permits increased in the Northeast by 2.8 percent compared to May and were up 159.6 percent from a year earlier.  The rate of housing starts increased 35.5 percent from May to June and 112.4 percent year-over-year but single family housing starts were actually down by 27.3 and 20.0 percent. Units were completed at a rate 59.0 percent lower than in May and down 14.3 percent from June 2014.

In the Midwest permitted rose 2.9 percent for the month but dropped 11.6 percent from the previous year. Housing starts declined by 0.7 percent and 27.5 percent for the two periods.  Completions during the month were lower by 6.3 percent but were up 1.4 percent from the previous June.

Permits in the South were issued at a rate that was 10.4 percent higher month-over-month and 18.0 percent above the previous June. Housing starts rose by 13.5 percent from May and 42.8 percent from June 2014. There were 7.7 percent more units completed than during May and 33.3 percent more than the year before.

The West saw a rise in permitting of 9.5 percent from May and 27.4 percent year-over-year.  Housing starts dipped 6.0 percent from the previous month but were up 9.6 percent from a year earlier. Unit completions were down 1.3 percent from May but 29.5 percent higher on an annual basis.