Housing starts in June were all but unchanged from those in May, according to figures released on Tuesday by the U.S. Commerce Department. Single-family starts came in at a seasonally adjusted annual rate of 454,000 units in June, while multifamily starts for the month declined 21.5% percent, to 95,000 units, dragging the overall housing production total down 5%, to 549,000 units.
While the figures may disappoint many, they surprise few. With the homebuyer tax credit program ended (though the transaction closing deadline has been extended from June 30 to September 30), most analysts expected a lull, and a minority were even slightly encouraged by the fact that starts seem to have stabilized.
Among the analyst comments cited on Tuesday by the Wall Street Journal’s Developments blog, for example, Michael Rehault, of JP Morgan’s North American equity research, declared: “Overall, we believe the housing market is beginning to stabilize once again, following lower levels due to the pulling forward of demand from the tax credit. Moreover, we believe that over the coming months, we expect demand to continue to stabilize and modestly increase … we believe the group is reflecting an outlook for a resurgence in impairment charges, which we believe is unwarranted, given our outlook for home prices to continue to largely hold. … Our positive stance on the builders is based on our view that housing should continue to recover over at least the next 24 months, and the builders are well positioned to take advantage of an upturn.”
And National Association of Home Builders vice president and senior economist Bernard Markstein, said the association expects to see “some improvement in both housing starts and sales activity” over the next several months as buyers take advantage of relatively low prices and historically low mortgage rates. However, he added, and some outside analysts echoed, that “builders continue to confront significant challenges in obtaining financing for viable new projects, and this problem remains a formidable obstacle to economic growth.”
The NAHB pointed to some potentially positive signs in June’s permit-issuance figures, which rose 2.1% to a seasonally adjusted annual rate of 586,000 units. Single-family permits fell 3.4%, to 421,000 units, for the month, although that decline was due entirely to a drop-off in the South. Multifamily permits rose 19.6%, to a seasonally adjusted annual rate of 165,000 units, in June. Combine single-family and multifamily permit issuance was up 32.3% in the Northeast, down 10.8% in the Midwest, down 3.1% in the South, and up 9.7% in the West for the month, NAHB noted.
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