According to a new report by the U.S. Housing and Urban Development and Commerce Department, led by solid single-family production, total housing starts increased 17.3 percent in June 2020 to a seasonally adjusted annual rate of 1.19 million units.
The June 2020 reading of 1.19 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 17.2 percent to an 831,000 seasonally adjusted annual rate, after an upward revision from the May estimate. The multifamily sector, which includes apartment buildings and condos, increased 17.5 percent to a 355,000 pace.
"Fueled in part by record low mortgage rates, builders are seeing solid demand for housing despite the challenges of the virus and elevated unemployment," said Chuck Fowke, chairman of the National Association of Home Builders. "Demand is growing in lower density markets, including exurbs and small metros."
"Single-family construction is expanding off April lows due to lean inventories of new and existing homes," said NAHB Chief Economist Robert Dietz. "However, builders face challenges in growing costs, particularly rising prices for lumber."
On a regional and year-to-date basis (January through June of 2020 compared to that same timeframe a year ago), combined single-family and multifamily starts are 2.2 percent higher in the Midwest, 0.2 percent higher in the South, 2.9 percent higher in the West and 5.4 percent lower in the Northeast.
Overall permits increased 2.1 percent to a 1.24 million unit annualized rate in June. Single-family permits increased 11.8 percent to an 834,000 unit rate. Multifamily permits decreased 13.4 percent to a 407,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 3.4 percent higher in the South, 8.8 percent lower in the Northeast, 2.3 percent lower in the Midwest and 3.9 percent lower in the West.
The National Association of Realtors chief economist Lawrence Yun commented, "The housing market is hot. Homebuyers have swiftly moved into the market to take advantage of the unimaginably low mortgage rates. But inventory is lacking with a sizable backlog of buyers getting outbid by others. More homes therefore need to be built to help relieve the housing shortage. The latest increase in housing starts of 1.186 million (17% gain) is only a bare, partial recovery after a shutdown. The country needs at least 1.5 million units. Building more homes also has an added benefit of boosting the local economic growth. In the meantime, expect multiple offers to be common on many mid-priced homes for the remainder of the year."