U.S. Housing Report Sends Mixed Message as Interest Rates Take Their Toll

June’s housing report provided mixed data on the U.S. real estate sector, with a pick up in new construction driven by multifamily construction, but a multi-month decline in single family housing starts. A housing start is counted as soon as groundbreaking begins and each unit in a multi-family housing project is treated as a separate housing start.

Multifamily construction surged over 19 percent, driving total housing starts up 3 percent annualized last month, while starts of one-family homes fell for a fourth straight month. Building permits, a proxy of future construction activity, rose 3.4 percent, also due to a pickup in applications for multifamily projects. Meanwhile, authorizations for single-family homes decreased 2.3 percent to the slowest pace in more than a year. Single-family homebuilding fell in the Northeast and the West, but increased in the densely populated South and the Midwest, generally considered more affordable.

With mortgage rates stuck near 7 percent, the strong pace of single-family construction seen at the end of last year is fading. The report also showed permits for future construction of single-family houses dropped to a one-year low last month. 

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