New home construction workers. (Photo: Reuters)
The Commerce Department said Tuesday U.S. housing starts rose 4.8% to a seasonally adjusted annual pace of 1.19 million. Economists surveyed by MarketWatch had forecast a 1.17 million pace, but the figures for May–originally reported as 1.16 million–were revised down to 1.14 million.
The prior month’s data indicate a housing sector struggling to tread water in the second quarter and single-family home construction continues to run well ahead of permits, which are likely to limit gains at least in the near term.
Building permits, which foreshadow starts in the future, increased 1.5% to a 1.15 million-unit rate last month, while permits for the construction of single-family homes increased 1.0% to a 738,000-unit rate. Multi-family building permits increased 2.5% to a 415,000-unit pace.
While the housing market is being supported by loosened lending practices and a demand for rental accommodation, home building is being weighed down by labor and land shortages.
A survey of homebuilders published on Monday showed weakness in certain areas of the housing market, with builders citing government regulations, as well as shortages of lots and labor.
Groundbreaking on single-family homes, the largest segment of the market, increased 4.4 percent to a 778,000-unit pace in June. Single-family starts in the South, where most home building takes place, gained 0.5 percent.
Single-family starts jumped 31.6 percent in the Northeast and climbed 3.1 percent in West. Groundbreaking on single-family housing projects increased 7.3 percent in the Midwest.
Housing starts for the volatile multi-family segment rose 5.4 percent to a 411,000-unit pace.
