U.S. Housing Starts and Permits (June 2024)

Home building activity records a modest rebound in June, thanks to a healthy gain in multifamily starts 

• Housing starts rose 3.0% month-on-month (m/m) in June, to 1.35 million (seasonally adjusted annualized rate) units in June – from an upwardly revised reading of 1.31 million (previously 1.28 million) in May. The reading came in a touch ahead of the consensus forecast which called for a relatively flat reading. 
• Last month's uptick in home building was entirely due to a surge in multifamily projects (+19.6%), while single-family starts (-2.2%) were lower on the month. 
• Housing permits – a leading indicator of future building activity – rose by 3.4% to 1.45 million, also driven entirely by a sharp gain across the multifamily (+15.6%) segment. Single-family permits were lower by 2.3%.
• Regionally, housing starts surged across the Northeast (+34.4%) and Midwest (+26.8%) but were lower across both the West (-6.1%) and South (-1.7%).

Key Implications

• Home building activity recorded a modest rebound in June, thanks to a healthy gain in multifamily starts. However, given the inherent volatility across this segment, some giveback is likely over the coming months. For the second quarter, housing starts averaged 1.35 million – the lowest level since the early stages of the pandemic. 
• After rising 16% (annualized) in the first quarter, residential investment looks to be a small net drag for second quarter growth – our current Q2 GDP tracking is sitting at 1.9%. With the Federal Reserve only expected to make one or two rate cuts by year-end, longer-term Treasury yields (and borrowing rates) will remain elevated over the near-term, preventing any meaningful recovery in housing activity from taking hold through the second half of this year.  

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