MW: Housing starts rise 4.8% in June, as supply still lags demand
Housing starts jumped in June but from downwardly-revised levels earlier in the year, pointing to a market for newly-constructed homes that continues to grind forward slowly and steadily.
Starts were up 4.8% to a seasonally adjusted annual pace of 1.19 million, the Commerce Department said Tuesday. Economists surveyed by MarketWatch had forecast a 1.17 million pace. But May figures, originally reported as 1.16 million, were revised down to 1.14 million.
Permits, which foreshadow starts in the future, rose 1.5% to an annualized 1.15 million.
For the second quarter, starts are averaging a 1.16 million rate, up fractionally from the 1.15 million pace averaged in the first quarter. But permits are running at the same 1.14 million pace.
Single-family starts, which are tracked as a signal on the health of the market for home purchases, jumped 4.4% in June to a 778,000 pace, but are down about 3.6% in the second quarter compared to the first three months of the year.
Builders have been reluctant to ramp up construction to pre-recession levels even as the housing market grows even more starved for inventory. Pantheon Macro Chief Economist Ian Shepherdson wrote in a research note, “Homebuilders’ behavior likely is a continuing echo of their experience during the crash. No one wants to be caught with excess inventory during a sudden downshift in demand. In this cycle, the pursuit of market share and volumes is less important than profitability and balance sheet resilience.”
Still, demand for new homes is robust, and builders like KB Home KBH, -0.43% , which reported second quarter results late in June, have beat expectations.
