Building permits for privately owned housing units came in at an annual rate of 1.343 million in June. This represents an increase of 7.4% from the May 2015 annualized rate of 1,250,000, and an increase of 30.0% from the June 2014 rate of 1,033,000.
The economy has been continuing its slow improvement, as steady job gains, low interest rates, and the June hike in building permits foretell a likely increase in single-family home starts in the near future.
“The multifamily gains this month are encouraging and show that the millennial generation continues to be drawn to the rental market”, said National Association of Home Builders (NAHB) Chairman Tom Woods, a home builder from Blue Springs, Mo. “These headwinds appear to be affecting production gains in the single-family sector”.
Regionally in June, combined single- and multifamily starts rose by 35.5 percent in the Northeast and 13.5 percent in the South. The Midwest and West posted respective losses of 0.7 percent and 6.0 percent.
Economists had expected housing starts to climb to a rate of 1.125 million from the 1.036 million originally reported for the previous month. The data was seasonally adjusted.
“All the action is in the multi-family components, because activity has been massively distorted by a surge in activity in New York ahead of the scheduled expiration of a tax-break for multi-family developments on June 15”, he wrote.
Estimates of the number of housing units now under construction highlight the degree to which multifamily starts have grown over the last year or so. At the same time, single-family permitting growth has increased at a more-incremental pace, up from 642,000 in March to 687,000 in June.
The NAHB/Wells Fargo Housing Market index released on Thursday found homebuilders’ confidence remained sideways, but held at a more than 9-1/2-year high in July.