Housing Starts Fall Again in June

By:: Peter King | July 20, 2010

Housing starts fell another 5 percent in June, as demand continued to shrink following the end of the homebuyer tax credit.

Total housing starts fell to an annual rate of 549,000 units, according to monthly figures released this morning by the Commerce Department, with most of the decline in multiunit dwellings such as apartment buildings and condominiums. Construction starts on single-family homes held nearly steady, declining only 0.7 percent to an annual rate of 454,000 units.

The apparent stability in single-family construction data may be misleading, however, owing to the large sampling error in the Commerce Department’s monthly report. Instead, the figures seem to confirm last month’s report showing a massive drop-off in demand following the end of the homebuyer tax credit program.

The May report showed a decline of nearly 19 percent, more than 110,000 units, in the annual rate of single-family construction starts in the immediate aftermath of the end of the homebuyer tax credit program. The consistency of the May and June figures appear to support the scale of that decline.

The number of single-family starts is the lowest reported since May 2009. The lowest rate of single-family housing starts since the Fall 2008 economic crisis was 360,000 in January 2009.

On a positive note, building permits issued for privately owned housing units of all types rose in June, increasing 2.1 percent to an annual rate of 586,000 units. That figure was largely driven by a nearly 21 percent increase in permits for buildings of five or more units, which tend to be fairly volatile.

Permits for single-family homes fell 3.4 percent, to an annual rate of 421,000 units, down from 436,000 the month before. The annual rate for buildings with five or more units was 145,000, up from 120,000 in May.

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