New home construction has fallen and it can’t get up.
Residential home starts nationwide fell 12.3 percent in June, to an annualized rate of 1.17 million, the government reported, according to Bloomberg.
The latest figures marked the biggest drop in home construction since November 2016. And couple that with a 2.2 percent drop in permits — a gauge of future activity — it made for the weakest activity since in nine months. That low-point coincided with hurricanes Harvey and Irma, which devastated the southern U.S. last fall.
In real numbers, the June drop in home starts is around 164,000.
That compares to May, which saw the highest level of starts at 1.35 million since July 2007. The fall reflects a 19.8 percent drop in multifamily home starts and a 9.1 percent drop in single-family home starts.
Multifamily new construction is generally up and down, however, so gauging month to month is difficult. Multifamily starts rose in March 14.4 percent from a 10.2 percent drop in February.
The reasons for the low residential construction numbers are many. On the buyer side, mortgage interest rates and prices continue to climb and outpace wage gains.
Developers are also having trouble finding qualified labor, and enough land to build, according to Bloomberg. [Bloomberg] — Dennis Lynch