(RTTNews) – A report released by the Commerce Department on Friday showed a substantial rebound in new residential construction in the U.S. in the month of June.
The Commerce Department said housing starts soared by 19.0 percent to an annual rate of 1.427 million in June after plummeting by 15.2 percent to a revised rate of 1.199 million in May.
Economists had expected housing starts to surge by 12.2 percent to an annual rate of 1.320 million from the 1.177 million originally reported for the previous month.
The spike in housing starts came as multi-family starts skyrocketed by 76.2 percent to an annual rate of 532,000, more than offsetting a 0.2 percent dip in single-family starts to an annual rate of 895,000.
“Looking further ahead, we don’t see much upside for starts until interest rates move lower,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.
“There is still a shortage of housing supply but builders of single-family homes – which account for more than two-thirds of starts – will need work down more of their inventory before they boost construction,” she added. “We see starts mostly moving sideways until the latter part of 2027.”
Meanwhile, the report said building permits slumped by 3.0 percent to an annual rate of 1.367 million in June after falling by 0.9 percent to a revised rate of 1.410 million in May.
Building permits, an indicator of future housing demand, were expected to edge down by 0.2 percent to an annual rate of 1.410 million from the 1.413 million originally reported for the previous month.
Multi-family permits plunged by 4.3 percent to an annual rate of 496,000, while single-family permits tumbled by 2.4 percent to an annual rate of 871,000.
A separate report released by the National Association of Home Builders on Thursday showed an unexpected deterioration in U.S. homebuilder confidence in the month of July.
The report said the NAHB/Wells Fargo Housing Market Index fell to 34 in July from an upwardly revised 36 in June.
Economists had expected the index to come in unchanged compared to the 35 originally reported for the previous month.
