New Housing Starts Up in June

New home construction rose in June, driven by a strong surge in construction starts on single-family homes, which were up nearly 15 percent from May's level, according to new figures released by the Census Bureau.

The increases in both building permits and construction starts surprised economists, who had predicted little or no change. Overall, building permits issued in June were up 8.7 percent from May, to a seasonally adjusted annual rate of 563,000. New permits for single-family homes were up nearly 6 percent in June, to an annual rate of 430,000. The survey covers building permits and housing starts for both single-family homes and multiunit buildings.

Overall new housing starts were up 3.6 percent in June, to a seasonally adjusted rate of 582,000 units. The big jump in single-family starts was dampened in the overall figures by a sharp drop in construction starts of multiunit buildings, which dropped by nearly 30 percent following a 60 percent increase in May. The big swing is likely the result of the survey's large margin of sampling error; the Census Bureau cautions that it may take 3-4 months for underlying trends to become reliably established.

By that measure, both new housing permits and housing starts have shown general increases since March after a series of sharp declines throughout the previous year. Both building permits and housing starts in June were at approximately half of their June 2008 levels.

The new housing construction market continues to be depressed by rising unemployment and a glut of foreclosed homes which have created an oversupply in the housing market overall.

On a related front, the National Association of Home Builders reported Thursday that confidence among home builders rose slightly in June, with its monthly Housing Market Index increasing by two points to 17. Although improving, that still represents a fairly dismal outlook; lower scores on the 100-point scale indicate a more pessimistic view of current market conditions.

Overall, the total number of homes of all types currently under construction continued to dwindle in June, falling 3.4 percent from the month before to 630,000 units. That figure has consistently declined every month since May 2007, when it stood at 1,520,000 units. An increase in that figure will be one of the most reliable indicators that the housing market has indeed turned around.