Housing Starts Unexpectedly Plunge 12.3% in June, Permits Down 2.2%

Economists were shocked by today's housing report. Let's go over the details.

Mortgage News Daily reports Housing Permits Soften, Starts Plummet.

All three measures of residential construction activity performed poorly in June, and the two most closely watched numbers, construction permits and housing starts, fell short of their June 2017 numbers.

Starts

  • The worst numbers were for privately authorized housing starts.  They failed to hold on to their gain in May, dropping 12.3 percent to 1,173,000 units. May's estimate of 1,337,000 units was revised down from the original 1,350,000.  The June estimate fell below the June 2017 pace by 4.2 percent.
  • The results didn't come close to meeting expectations. Analysts polled by Econoday had projected some softening from the May number, a 5.0 percent month-over-month increase as originally reported. Still they were looking for starts in the range of 1,285,000 to 1,350,000 units.  Their consensus was 1,320,000.
  • Single-family starts were down 9.1 percent from May and off 0.2 percent from the June 2017 number.  The June estimate was 858,000 units compared to 944,000 in May, the latter an upward revision from 936,000. Multifamily starts dropped by 20.2 percent to a rate of 304,000 units, 15.3 percent lower than the same period in 2017.

The results didn't come close to meeting expectations. Analysts polled by Econoday had projected some softening from the May number, a 5.0 percent month-over-month increase as originally reported. Still they were looking for starts in the range of 1,285,000 to 1,350,000 units. Their consensus was 1,320,000.

Permits

  • Construction permits were authorized in June at a seasonally adjusted annual rate of 1,273,000, down 2.2 percent from the May rate of 1,301,000.  This is 3.0 percent lower than the permitting pace in June 2017.
  • Analysts were expecting permits to increase from May, looking for results over a range of 1,300,000 to 1,360,000.  Their consensus was 1,328,000 units.
  • Single family authorizations were up, rising 0.8 percent to an annually adjusted 850,000 units compared to 843,000 (revised from 844,000) in May and were 4.6 percent above the year-earlier rate.  Multi-family permits fell by 8.7 percent to 387,000 and are 16.2 percent behind the June 2017 pace.

Completions

  • Housing completions held their ground, remaining at a rate of 1,261,000 units. The previous May estimate was revised down to that number from 1,291,000.  Completions in June were 2.2 percent higher than a year earlier.  Single-family completions were estimated at a rate of 862,000, down 2.3 percent for the month but ahead of last year by 5.3 percent.  Multifamily completions rose 7.1 percent to 393,000 but are 2.7 percent lower than the prior June.
  • Completions in June numbered 113,500 on an unadjusted basis compared to 105,800 in May.  There were 75,800 single family completions compared to 74,400 a month earlier.  Completions in 2018 through June are 8.3 percent higher than the same period in 2017, 581,600 versus 537,000, and those for single-family units are up 8.4 percent.
  • At the end of the reporting period there were 1,121,000 homes nationwide in some phase of construction. Single-family units accounted for 515,000 of those underway.  There were also 160,000 permits that had been issued but for which construction had not yet begun.

The Census Bureau's New Residential Construction report has more details.

Starts by Region

  • US: Down 12.3%
  • Northeast: Down 6.8%
  • Midwest: Down 35.8%
  • South: Down 9.1%
  • West: Down 3.0%

Wow. Revisions coming?

Mike "Mish" Shedlock

Comments (11)
No. 1-11
flubber
flubber

NAR head economist, Lawrence Yun, will spew his usual pablum….."transitory"

Ordell Robbie
Ordell Robbie

Wise words from Too Short: In the ghetto You think life is hard Food stamps and to' up cars Wall to wall dirty orange carpet Sit in a bucket hopin' you can start it And ride around to the liquor store Can't get a job get drunk some more You better stop trippin' on them stereotypes Cause in the ghetto there's a good life We ain't starvin' like Marvin and won't see no roach When ya chill wit the rich folks in the hood Ya sittin' on leather watchin' big screens Bought by the dope fiends Smokin', and what about the brother wit the good jobs Save money and workin' hard Bought a house for his wife and kids Ya only got one life to live I know a brother that got some cocaine Ya know his face but don't know his name Ya know he got the sack man And he's sittin' on a phat bank Sellin' cars at his house in the driveway Benz so clean don't roll it just fly away Cause folks got money in the ghetto Yea you know Hey hey hey What cha got to say (It's money in the ghetto) Hollywood Havin' money in the ghetto Money in the ghetto ain't nothin' new It's been like that way before you Was even born; get up from the down stroke Chocolate City for the black folks Say it loud in ya hot pants Man child in the promise land I take ya back to iceberg Slim And all the players that came before him If you a everyday hustler, get cha money Cause what they do to black man ain't funny All the time tryin' to put us the pen You get parole and then they send ya again All the homies in the hood gettin' paid You might have left but the money stayed In the ghetto it ain't all bout drugs Gettin' paid doin' all kinds of stuff Only rule on the street is don't get caught Unless ya hustle ain't breakin' the law And even though rich folks got it good We're sittin' on it phat in the hood I'm ridin' them gold ones Smokin' dank and it's potent Ask them fools cause they know It's money in the ghetto Hey hey hey What cha got to say (It's money in the ghetto) Hollywood Havin' money in the ghetto I got money baby just tell me the price Cause Short Dawg ain't nothin' nice I always hit the town wit my boy Ben Franklin Spend fo get an ounce a dank then Rich nigga get high relaxin' And if I bust a Ben Franklin and get some Andrew Jackson's Five twenties for a hundred dollar bill You know the math lets make deal On a one dollar bill if ya look on the front Ya find the face of George Washington Make money baby that's all I do That's how I know Thomas Jefferson is on the two Abraham Lincoln got shot and died Freed the slaves so they put him on the five And Andrew Jackson, my old time friend, They put his face on the front of the ten They are the dead presidents From the hood and they represent The american dream for the average minority Make some money get some weed and a forty I'm on the east side livin' like a king Kick back watch a fifty inch screens Bounce to the west and hit studio And spend my money in the ghetto

Nowadays if you can't say a rap, or play sports You might just come up short And they always say the same things Don't be a gangster or a dopefiend Get your high school diploma, go to college Get a degree and start makin' dollars Only one thing wrong, and it's a Trip Inner city schools don't teach us shit Got us stuck on stupid, Straight S.O.S Can't get nothin, but they payin the rest Of them fools All Around the world in the other countries They should be spendin that money right here In the state of California You graduate and can't spell "diploma" Dip to the hood and get rich Slangin rocks to a smoked-out bitch No school'll come close to that A few transaction make my pockets fat I make a lot of money and it ain't no lie I'll probably ball 'til the day I die And if I didn't, so what? I bet you I'd still come up Cause there's a whole lot of money in the ghetto.. yeah you know

oudaveguy98
oudaveguy98

Midwest data point screaming for an explanation. Was it really a regional phenomenon, or did something blow up in one or two of the urban areas in that region?

Carl_R
Carl_R

When interest rates start to rise, buyers rush to buy while they can still afford it, before the payments get out of reach. Now that rush is over, and we wait. In time the payments will come back into reach, or houses won't sell. There are only three ways for payments to become affordable again. Wage increases, interest rate declines, or falling home prices. The latter is what usually happens.

KidHorn
KidHorn

I can understand the South declining over the last few months due to hurricane replaced homes having starts die off, but WTF happened in the midwest? 160->243->156?