Housing starts increase – The Daily Tearsheet

Vital Statistics:

Stocks are higher as earnings continue to come in. Bonds and MBS are up.

Housing starts increased to a seasonally-adjusted annual rate of 1.32 million, which was above the consensus estimate. This was a 4.5% increase from May, however it was a 0.5% decline from a year ago. Building Permits rose 0.2% MOM to 1.39 million, however this was a 4.4% decrease from a year ago.

Housing completions fell markedly – decreasing 14.7% MOM and 24.1% YOY to 1.31 million.

Multifamily starts jumped 26% YOY, while single family starts fell 10%. Builders had prioritized multifamily for years, and this trend had been reversing in the past year. It looks like June was a lurch back to the post-COVID trend of more multi construction.

CRE investors had been waiting for a pullback in multifamily performance (we had a deluge of supply post-pandemic), but performance has held up. Perhaps more investment dollars are flowing back into the multi space.

Builder confidence improved in July, according to the NAHB. We are still plumbing the depths we saw in the post-COVD era however. Builders are going to be impacted by tariffs, although the cost is expected to be in the 1% – 2% range.

Affordability constraints prevent them from being able to pass these on to buyers, so we are seeing gross margins fall.