Homes For Sale

New home construction surged in June, with housing starts increasing a seasonally adjusted 14.6 percent over the previous month and well exceeding analysts’ expectations.

Private construction starts were at an annual rate of 629,000 in June, according to figures released today by the Census Bureau, up from a revised May estimate of 549,000. Various surveys of economists had predicted a June rate of 575,000, with few expecting a rate of more than 600,000.   The new figures are largely seen as a rebound from weak activity in April and May, when poor weather and a spate of bad economic news, including higher gas prices, kept a lid on construction.   Single-family construction starts showed strong gains, after remaining largely flat the previous two months, increasing 9.4 percent over May, to a seasonally adjusted rate of 453,000 units. It was the second-highest rate reported in the last 12 months, just missing November’s peak of 454,000, though still quite low by historic norms.   Year-to-year, the June rate in single-family starts was up slightly from the June 2010 rate of 451,000, when the market was still benefitting from the effects of the homebuyer tax credit.   The new figures were driven in part by a strong increase in construction starts on multiunit dwellings of 5 or more units, which were up nearly 32 percent for the month, to an adjusted annual rate of 170,000 units. Figures for multiunit housing tend to be volatile and can vary significantly from month-to-month, but increased demand for rental properties has driven multiunit higher over the past year, with the new figures more than double those of June 2010.   Newly issued building permits were up as well, but far more modestly than construction starts. Building permits were issued at an annual rate of 624,000 in June, up 2.5 percent from the previous month and a 6.7 percent gain from June 2010. Once again, most of the gains were driven by increased activity in multiunit construction, even though it makes up only about one-third of the private residential construction market.   Building permits issued for on multiunit residences of five or more units were up 8.2 percent for the month, to an annual rate of 198,000, and up 40.4 percent from the June 2010 rate of 141,000. Demand and prices for apartments and other rental properties has been rising as more people lose their homes to foreclosure and tight credit and uncertain finances discourage others from purchasing homes.   Building permits for single-family homes barely changed from their level in May, up only 0.2 percent to 407,000 units, an increase of only 1,000. On an annual level, single-family building permits declined 3.8 percent from their level of 423,000 in June 2010.

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