Construction workers perform tasks on an apartment building in Orlando, Fla. on June 14, 2019.U.S. home building fell for a second straight month in June and permits dropped to a two-year low, suggesting the housing market continued to struggle despite declining mortgage rates.
“Residential housing construction is one of the leading indicators of a recession and while construction activity isn’t dropping precipitously, housing is stuck in a rut,” said Chris Rupkey, chief economist at MUFG in New York. “If the Fed thinks rate cuts are going to send housing construction up like a rocket, they better think again.”
Single-family home building, which accounts for the largest share of the housing market, increased 3.5 per cent to a rate of 847,000 units in June, partially recouping some of May’s sharp drop. Single-family housing starts fell in the Northeast, but rose in the Midwest, West and South. The PHLX housing index was lower, underperforming in a broadly weak U.S. stock market. The dollar was little changed against a basket of currencies, while U.S. Treasury prices rose.“These prints are in line with our view of a slowing housing market that is likely to continue on a downward trajectory for the rest of this year, but with no significant risks of an immediate slump,” said Igor Cesarec, an economist at Citigroup in New York.
Permits to build single-family homes rose 0.4 per cent to a rate of 813,000 units in June. Despite the increase last month, permits continue to lag housing starts, which suggests single-family home building could remain sluggish.Starts for the volatile multi-family housing segment dropped 9.2 per cent to a rate of 406,000 units last month. Permits for the construction of multi-family homes plunged 16.8 per cent to a pace of 407,000 units.