There were pullbacks in the annual numbers for permits and housing starts in June, however it was only minimal due to the strong multi-family sector. If it was not for the strong figures from multi-family, the numbers would have been far from on track.
Permits for residential construction went down .6% from their May level to an annual rate of 1.685 million units as permits for single family homes fell 8% to 967,000 units, meanwhile multi-family permits grew by 13.1 percentage points. On a year-over-year basis, total permits were up 1.4% while those for single-family residences were down 11.4%. Multifamily construction jumped 27.8% on an annual basis.
Home builder confidence dropped to a two-year low as high inflation and supply chain constraints prompted builders to halt construction on homes, reported the National Association of Home Builders. This is yet another sign that the housing market is due for a steep turnaround after the pandemic-era home buying frenzy. Builder confidence in the market for new homes posted its seventh straight monthly decline in July, falling 12 points to 55 for its second-biggest-month drop in history, according to the Wells Fargo Housing Market Index. The report also showed home builder expectations for both current and future sales have dropped sharply, pushing confidence to its lowest level since May 2020. National Association of Home Builders Chaire Jerry Conter stated that rising home building costs, high inflation, and production bottlenecks are causing builders to halt production as these costs are sometimes higher than what the property is worth! Even if the homes built are worth the margin for the builders, high interest rates have cut foot traffic and interest from potential buyers. Pantheon Macro chief economist Ian Shepherdson said confidence has further to fall. “This is a meltdown,” saus Shepherdson. “Pretty soon, anyone who has bought a home in the recent months will be sitting in a loss.”