Building permits and construction starts exceed forecasts in June

Housing starts exceed expectations

Housing starts in June also exceeded expectations, with a seasonally adjusted annual rate of 1,353,000 units versus an expected 1.30 million. This represents an increase of 3.0 per cent from the revised May estimate of 1,314,000 units. Despite the month-over-month increase, housing starts are still 4.4 per cent below June 2023 levels, suggesting a moderate pace of new construction compared with last year.

Increase in completions

The most notable development in the June report is the significant increase in the number of housing completions. At a seasonally adjusted annual rate of 1,710,000, completions jumped 10.1% from the revised May estimate and were up 15.5% from June 2023. This increase in the number of housing completions could help ease some of the supply constraints in the housing market.

Single-family home sector shows signs of weakness

While overall numbers improved, the single-family housing sector showed signs of weakness. Single-family housing starts fell 2.2% from May, and single-family permits fell 2.3%. These numbers point to potential headwinds for this crucial segment of the housing market.

Market forecast

Based on these mixed signals, the near-term outlook for the U.S. housing market is cautiously bullish. The unexpected strength in building permits and housing starts, coupled with the strong increase in completions, indicates resilience in the face of high interest rates. However, weakness in the single-family housing sector and the year-over-year decline in permits and housing starts warrant close monitoring. Traders should monitor potential market reactions to these data, particularly from stocks of homebuilders and related sectors.