Despite a 3% monthly increase, the pace of new housing construction was 4.4% slower in June 2024 than a year prior, according to data released Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD).
In June, privately owned housing starts were at a seasonally adjusted annual rate of 1.353 million units. Single-family starts were down 2.2% month over month but up 5.4% annually to a pace of 980,000 units, while multifamily starts came in at a rate of 360,000, up 22% from a month prior but down 23.4% annually.
“Multi-family construction has cooled considerably, while the dip in new single-family construction was more modest,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. “A slowdown in apartment construction is not surprising. In 2023, there were record numbers of apartments delivered in some markets across the U.S., leading developers to pull back on bringing new units to the market. Last year, rents in some markets fell and property managers were offering rent and other concessions to attract renters.”
Additionally, Sturtevant noted that while demand for single-family homes is strong, higher mortgage rates and record-high home prices are preventing some buyers from entering the market. But some good news for homebuyers is that housing completions, including those of single-family homes, was up on both a monthly and yearly basis, helping to bring the inventory of new single-family homes available for sale to its highest level since 2008.
In June, housing completions posted a 10.1% monthly increase and a 15.5% annual increase to 1.710 million units. Single-family completions came in at a pace of 1.037 million units, up 1.8% from May and 3.2% above year-ago levels, while multifamily completions recorded even larger gains, jumping 26.2% month over month and 40.2% year over year to a pace of 656,000 units.
Looking ahead, economists do not believe much will change in the housing market’s struggle to combat years of under-building, as the total number of permits issued dropped 3.1% annually to a pace of 1.446 million. The pace of single-family permits issued was also down on a yearly basis by 1.3% to 934,000. But while the pace of multifamily permits issued was down 6.5% annually to 460,000, it was up 19.2% from May.
“The June surprise to the upside is mostly a multi-family story. Building permits exceeded consensus expectations, again fueled by an uptick in multi-family permits,” Odeta Kushi, First American‘s deputy chief economist, said in a statement. “Despite the challenging environment, the housing market remains structurally under built. For more than a decade, homebuilding has not kept up with the demand for shelter, creating a housing supply deficit that has proven difficult to reduce significantly. As builders break ground on additional housing, we will inch closer to balancing our housing deficit.”
On a regional level, the Northeast (121,000 starts) and Midwest (194,000 starts) posted monthly increases of 34.4% and 26.8%, respectively. The South (732,000 starts) and the West (306,000 starts) posted respective monthly declines of 1.7% and 6.1%.
The same trend occurred on an annual basis, with the Northeast (+24.7%) and Midwest (+16.2%) posting yearly increases while the South (-10%) and the West (-9.5%) recorded decreases.
