Advertisement
What really powers the cloud? Behind every Google search, A...
A lot of what defines a home isn’t visible at handover. I...
Private equity has played a significant role in shaping Indi...
Luxury real estate is one of the most talked-about segments ...
Airports play a much bigger role than just enabling travel -...
Single-family housing construction in the United States weakened in June as higher mortgage rates and elevated inventories of unsold homes continued to weigh on residential development. Data released by the US Census Bureau showed that single-family housing starts and building permits both declined during the month, while overall housing starts increased due to a sharp rise in multi-family construction. Homebuilder sentiment also remained subdued, with developers citing higher financing costs, economic uncertainty, rising material prices and expensive land. Although recent housing legislation aims to improve affordability and accelerate project approvals, industry participants expect its impact to take time to materialise.
Single-family home construction in the United States declined in June as higher mortgage rates and a growing inventory of unsold new homes continued to restrain residential development, according to data released by the US Commerce Department's Census Bureau on Friday.
Single-family housing starts, which account for the majority of US homebuilding activity, slipped 0.2% from the previous month to a seasonally adjusted annual rate of 895,000 units. Compared with the same month last year, single-family housing starts fell 3.2%.
Construction activity also weakened in terms of future supply. Building permits for single-family homes, an indicator of upcoming construction, declined 2.4% during June to a seasonally adjusted annual rate of 871,000 units. On an annual basis, permits were down 0.2%.
The slowdown comes as mortgage borrowing costs remain elevated. According to data from mortgage finance agency Freddie Mac, the average rate on a 30-year fixed mortgage has risen by nearly 60 basis points since the United States and Israel launched attacks on Iran at the end of February. The rate reached an 11-month high of 6.55% during the past week, increasing borrowing costs for prospective homebuyers.
Homebuilder confidence has also remained under pressure. A survey released by the National Association of Home Builders during the past week showed sentiment among single-family homebuilders remained weak in July. Developers cited economic uncertainty linked to the conflict in the Middle East, rising construction material costs, higher land prices and elevated mortgage rates as the principal challenges affecting the market.
Despite an ongoing national shortage of housing, particularly entry-level homes, the inventory of unsold newly built homes has climbed to levels last seen in late 2007 during the collapse of the US housing market. Industry participants have welcomed recently enacted bipartisan housing affordability legislation passed by the US Congress, which includes measures to restrict investment firms from acquiring single-family homes and provisions to waive or accelerate environmental reviews for construction projects. However, builders indicated that the benefits of the legislation are unlikely to be immediate as implementation will take time.
The legislation became law despite President Donald Trump not signing the bill, after calling for separate voting legislation to be approved.
In contrast to the weakness in single-family construction, multi-family residential development recorded strong growth. Housing starts for projects comprising five or more units increased 76.3% during June to an annual rate of 513,000 units and were up 19.3% compared with a year earlier.
Supported by the increase in apartment construction, overall housing starts rose 19% month-on-month to a seasonally adjusted annual rate of 1.427 million units, representing a 3.5% increase from June last year.
Meanwhile, building permits for multi-family projects declined 4.9% to an annual rate of 445,000 units. Overall building permits fell 3% during the month to a seasonally adjusted annual rate of 1.367 million units and were down 2.3% compared with the corresponding period last year.
Source - Reuters
Advertisement
Facebook
Whatsapp
