U.S. housing starts and building permits unexpectedly fell for the month of June, suggesting the housing market recovery was struggling to get back on track after stalling in late 2013. Many attempted to blame the weak housing market on unusually cold weather since February’s weak report was released, but that excuse simple will not do in the middle of the summer.
Then, housing starts and building permits tanked far more than economist’s expected in May even as the weather began to warm in what was another sign the housing recovery was artificial.
Now, groundbreaking tanked by 9.3 percent to a seasonally adjusted annual 893,000 million unit-pace, which is the lowest since September, before the cold weather even. The Commerce Department also said on Thursday April’s starts were revised downward to show a steeper 7.3 percent drop, up from the previously reported 6.5 percent drop.
Economists polled by Reuters had forecast starts rising to a 1.02 million-unit rate last month.
Housing has been constrained by higher mortgage rates and a shortage of properties for sale has pushed up prices, reducing affordability for many everyday Americans.
Groundbreaking for single-family homes, the largest part of the market, plummeted 9.0 percent in June to a 575,000-unit pace, also the lowest since November of 2012. Meanwhile, single-family starts in the South dropped to their lowest level in two years.
Starts for the more volatile multi-family homes market fell by 9.9 percent to a 318,000-unit rate.
Permits, in total, fell 4.2 percent to a 963,000-unit pace in June, though Wall Street economists had expected them to rise to a 1.04-million unit pace. Permits for single-family homes alone did increase 2.6 percent to a 631,000 unit-pace, which is the highest level since November. However, permits for multi-family housing absolutely tumbled 14.9 percent to a 332,000-unit pace.
The housing market is still hanging by a threat, relying upon artificial and dangerous government regulations and rules to regain a small measure of momentum. Earlier in June, two policy statements made by Mel Watt, director of the Federal Housing Finance Agency (FHFA), and Shaun Donovan, secretary of HUD, backed-off tight restrictions that required sound lending practices, repeating the mistakes of the subprime mortgage crisis.
The FHFA is the regulator of Fannie Mae and Freddie Mac, which along with the Federal Housing Administration (FHA) are responsible for guaranteeing about 75 percent of all mortgage credit in the United States. In an effort to boost a failing housing market, they’ve abandoned the rules against underwriting risky mortgages.