June Housing Starts: A True Bright Spot

• June housing starts rose 17.3% from May, to 1,186,000 (SAAR), and were down 4 percent from a year ago, according to the U.S. Census Bureau.
• Building permits were up 2.1% from May and down 2.5% from June 2019, to 1,241,000.
• Housing completions rose 4.3% from May and are up 5.1% from June 2019

All things considered, new home sales have had a very strong spring and been one of the true bright spots for the economy in recent months – and builders have taken notice. Homebuilder confidence has more than doubled in the last three months, indicating that builders are shedding any concerns associated with rising materials costs and land shortages, and diving right into a market that they believe will see enduring demand from would-be buyers, thanks in part to record-low mortgage rates and changing buyer preferences. Today’s data highlights this changing sentiment, and this momentum for home construction should continue. Following last month’s strong improvement in permits, home starts saw a significant uptick in June as those permitted projects began to get off the ground. Of course, several looming risks remain that could thwart this improved outlook – such as the rising coronavirus case counts across the country and an unemployment situation that appears to be becoming more permanent. Both of these factors, as well as many others, pose considerable risks for the industry and the coming months will be telling to see how much impact they have on what is otherwise a rosy outlook for the new construction industry.