U.S. Housing Starts Rebound More Than Expected In June

(RTTNews) - New residential construction in the U.S. rebounded by more than expected in the month of June, according to a report released by the Commerce Department on Friday.

The Commerce Department said housing starts surged by 4.6 percent to an annual rate of 1.321 million in June after plunging by 9.7 percent to a revised rate of 1.263 million in May.

Economists had expected housing starts to jump by 3.5 percent to an annual rate of 1.300 million from the 1.256 million originally reported for the previous month.

The bigger than expected rebound by housing starts came as a spike by multi-family starts more than offset a steep drop by single-family starts.

The report said multi-family starts soared by 30.6 percent to an annual rate of 414,000, while single-family starts dove by 4.6 percent to an annual rate of 883,000.

"Housing starts rebounded to a small degree in June after falling to a five-year low in May. The overall pace of starts was still subdued, however, and is in keeping with the slow, multiyear downtrend in home construction," said Nationwide Economist Daniel Vielhaber.

He added, "Additionally, the entirety of the rebound came on the multifamily side as single-family starts fell further and are now well below the long-run average - indicative of builders adjusting to slower demand and rising costs."

Meanwhile, the Commerce Department said building permits inched up by 0.2 percent to an annual rate of 1.397 million in June after slumping by 2.0 percent to a revised rate of 1.394 million in May.

Building permits, an indicator of future housing demand, were expected to edge down by 0.2 percent to an annual rate of 1.390 million from the 1.393 million originally reported for the previous month.

The unexpected uptick by building permits came as multi-family permits surged by 8.1 percent to an annual rate of 478,000, more than offsetting a 3.7 percent plunge by single-family permits to an annual rate of 866,000.

A separate report released by the National Association of Home Builders on Thursday showed a modest improvement in homebuilder confidence in the U.S. in the month of July.

The report said the NAHB/ Wells Fargo Housing Market Index inched up to 33 in July after slipping to 32 in June. The uptick matched economist estimates.