Dive Brief:
- June housing starts increased 9.8% from May to a 1.17 million annualized rate — the second-highest level since November 2007, the Commerce Department reported Friday.
- Building permits also surged, climbing 7.4% to an eight-year high.
- Multifamily construction — which grew 29.4% — propeled the bump in overall starts. Single-family, however, saw a slight 0.9% dip.
Dive Insight:
The skyrocketing number of multifamily starts is somewhat misleading, however, as experts attribute it to increased activity in New York City, where multifamily tax incentives were set to run out last month.
Overall, multifamily data is an important factor in the number of starts, but single-family homes are considered a more telling indicator of economic stability. And the higher the number of starts on apartment buildings and condominiums, the greater the chance more tenants will remain tenants, rather than switch over to homeownership.
The economy has been continuing its slow improvement, as steady job gains, low interest rates, and the June hike in building permits foretell a likely increase in single-family home starts in the near future.
The Commerce Department's report comes one day after the NAHB announced builder confidence had reached its highest level in 10 years due to improved optimism about the housing market.
