U.S. single-family homebuilding fell in June after surging in the prior month, but permits for future construction increased solidly as a severe shortage of previously owned houses for sale supports new construction.
Single-family housing starts, which account for the bulk of homebuilding, dropped 7.0% to a seasonally adjusted annual rate of 935,000 units last month, the Commerce Department said on Wednesday. Data for May was revised up to show starts vaulting to a rate of 1.005 million units, instead of 997,000 units as previously reported.
May's pace was the highest in 11 months. The housing market has likely reached a bottom after being pushed into recession by the Federal Reserve's aggressive monetary policy tightening.
Housing supply remains well below pre-pandemic levels, driving groundbreaking on new projects. A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market Index increased to a 13-month high in July, with fewer builders reporting offering incentives to attract buyers.
With the average rate on the popular 30-year fixed mortgage approaching 7%, according to data from mortgage finance agency Freddie Mac, the anticipated housing market rebound could, however, be muted.
Residential investment has contracted for eight straight quarters, the longest such streak since the collapse of the housing bubble triggered the 2007-2009 Great Recession.
Permits for future construction of single-family homes increased 2.2% in June to a rate of 922,000 units.
