Housing Starts And Permits Mixed

Once again the down part of the housing sector's up-and-down year appears, this time in an unexpected 6.1 percent drop in permits to a much lower-than-expected 1.220 million annual rate for June. This is the lowest rate in more than two years. Starts performed better in June, posting a nearly as-expected 1.253 million rate.

Permits are down 6.6 percent from this time last year with weakness in the latest month centered in multi-family units which fell sharply on the month to a 407,000 annual rate. Year-on-year, multi-family permits are down 10.2 percent. Single-family homes are the more important of the two subcomponents and despite a respectable 0.4 percent monthly rise in June to an 813,000 rate are down 4.7 percent on the year.

But good news, especially for second-quarter residential investment, does come from starts on the single-family side, up a very strong 3.5 percent on the month to an 847,000 rate. Yet here too single-family units are down on the year, at minus 0.8 percent. Multi-family starts fell sharply in the month to a 406,000 rate but remain much higher on the year, at 24.5 percent.

Yet more not so good news for this checkered report comes from completions where single-family homes fell 1.8 percent on the month to 870,000. Multi-family completions fell 12.9 percent to 291,000. Lack of completions will limit ongoing sales.

Housing had a poor year last year and negative showings for ongoing yearly rates suggest that 2019 may also prove, despite promise in the spring, to hold back the sector's contribution to economic growth. Still starts did pick up compared to the first quarter and residential investment, after five straight quarter's of pulling down GDP, may yet prove to be a positive for the second quarter.