Groundbreaking increased 9.8 percent to a seasonally adjusted annual pace of 1.17 million units, according to the Commerce Department. Housing starts (groundbreakings) and permits each reached eight-year highs, with both metrics rising on the strength of multi-family housing.
Permits for future home construction increased 7.4 percent to a 1.34 million-unit rate, which the highest level since July 2007, and have been above a 1 million-unit pace since July. Groundbreaking also increased to its highest ever level for buildings that have 5 or more units since November of 1987. Multifamily production was up 29.4 percent to a seasonally adjusted annual rate of 489,000 units while single-family starts edged down 0.9 percent to 685,000 units. This is 9.8 percent (±19.9 percent) above the revised May estimate of 1,069,000 and is 26.6 percent (±19.6 percent) above the June 2014 rate of 927,000.
Friday’s groundbreaking numbers fell within the range of expectations of economists surveyed by Bloomberg ahead of the release; permitting numbers surpassed expectations.
Single family home starts in the southern region, where most home building is known to take place, jumped to their highest level since March of 2008. Some economists argue that the housing market will offset the drag on the economy from a struggling manufacturing sector and high trade deficits. Authorizations of units in buildings with five units or more were at a rate of 621,000 in June.
“Given strong demand and tight supply, we expect permits and starts to continue to post gains throughout the year following continued strength in traffic and sales”, said Smoke. This includes the most recent indicators relating to residential building permits, housing starts, and housing completions nationwide.