Residential Construction Slipped in June for Second Straight Month
Residential construction in the U.S. slowed for the second straight month in June, as both housing starts and the number of building permits issued declined.
Housing starts fell 2% to a seasonally adjusted 1.56 million, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal expected housing starts to rise 1.4%. Building permits slipped 0.6% to 1.69 million, but held 1.4% higher than the figure in the prior year. The drops came as interest rates climbed and a global housing boom faded.
The construction decline was driven by a drop in building in the South. Western states also saw a notable drop. Construction activity increased in the Northeast last month.
Buyers have pulled back as housing prices hit records, said Jeff Tucker, senior economist at home-buying site
Zillow,
and builders pay close attention to buyer demand. Builder confidence plummeted in July, according to a report from the National Association of Home Builders.
“That tells me that builders feel like a storm is coming,” Mr. Tucker said. “They’re battening down the hatches and really focusing on making sure that they can sell the homes they have completed now and the homes that they’ve actually already got under construction.”
Housing completions in June dropped 4.6% below the revised estimate in May, but held 4.6% above the rate at the same time last year. Many builders are stopping construction due to inflation, land prices and rising home-building costs, among other factors, NAHB Chairman Jerry Konter said in a statement.
The National Association of Realtors will release previously-owned home sales figures for June on Wednesday. Economists estimate that the sales of existing homes—the bulk of the U.S. housing market—declined by 0.9% last month.
Inflation hit 9.1% in June, a four-decade high, the Labor Department said earlier this month.
Jeffrey Roach, chief economist for LPL Financial, said wage and income growth aren’t keeping pace with inflation. That results in a softer demand for housing, said Mr. Roach.
Mr. Roach said there might be some hope for the slowing market. “What might be the silver lining, is that, with the pace of building permits exceeding starts, homebuilding in the near term may hold up,” he said.
Write to Rina Torchinsky at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Residential construction in the U.S. slowed for the second straight month in June, as both housing starts and the number of building permits issued declined.
Housing starts fell 2% to a seasonally adjusted 1.56 million, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal expected housing starts to rise 1.4%. Building permits slipped 0.6% to 1.69 million, but held 1.4% higher than the figure in the prior year. The drops came as interest rates climbed and a global housing boom faded.
The construction decline was driven by a drop in building in the South. Western states also saw a notable drop. Construction activity increased in the Northeast last month.
Buyers have pulled back as housing prices hit records, said Jeff Tucker, senior economist at home-buying site
Zillow,
and builders pay close attention to buyer demand. Builder confidence plummeted in July, according to a report from the National Association of Home Builders.
“That tells me that builders feel like a storm is coming,” Mr. Tucker said. “They’re battening down the hatches and really focusing on making sure that they can sell the homes they have completed now and the homes that they’ve actually already got under construction.”
Housing completions in June dropped 4.6% below the revised estimate in May, but held 4.6% above the rate at the same time last year. Many builders are stopping construction due to inflation, land prices and rising home-building costs, among other factors, NAHB Chairman Jerry Konter said in a statement.
The National Association of Realtors will release previously-owned home sales figures for June on Wednesday. Economists estimate that the sales of existing homes—the bulk of the U.S. housing market—declined by 0.9% last month.
Inflation hit 9.1% in June, a four-decade high, the Labor Department said earlier this month.
Jeffrey Roach, chief economist for LPL Financial, said wage and income growth aren’t keeping pace with inflation. That results in a softer demand for housing, said Mr. Roach.
Mr. Roach said there might be some hope for the slowing market. “What might be the silver lining, is that, with the pace of building permits exceeding starts, homebuilding in the near term may hold up,” he said.
Write to Rina Torchinsky at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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