After reporting a substantial increase in new U.S. residential construction in the previous month, the Commerce Department released a report on Wednesday showing a sharp pullback in housing starts in the month of June.
The Commerce Department said housing starts plunged by 8.0 percent to an annual rate of 1.434 million in June after spiking by 15.7 percent to a revised rate of 1.559 million in May.
Economists had expected housing starts to plummet by 9.3 percent to a rate of 1.480 million from the 1.631 million originally reported for the previous month.
With the steep drop, housing starts gave back ground after reaching their highest annual rate since hitting 1.561 million in June 2022.
Single-family starts tumbled by 7.0 percent to an annual rate of 935,000, while multi-family starts dove by 9.9 percent to an annual rate of 499,000.
The report said building permits also slumped by 3.7 percent to an annual rate of 1.440 million in June after surging by 5.6 percent to a revised rate of 1.496 million in May.
Building permits, an indicator of future housing demand, were expected to edge down by 0.1 percent to a rate of 1.490 million from the 1.491 million originally reported for the previous month.
Multi-family permits plunged by 12.9 percent to an annual rate of 518,000, more than offsetting a 2.2 percent jump in single-family permits to an annual rate of 922,000.
“The building permits data and upbeat homebuilder sentiment suggest some positive momentum for single-family starts as builders continue to see strong demand in the face of a scarce supply of existing homes for sale,” said Nancy Vanden Houten, U.S. Lead Economist at Oxford Economics.
The National Association of Home Builders released a separate report on Tuesday showing an uptick in U.S. homebuilder confidence in the month of July, with low existing inventory keeping demand for new homes solid.
The report said the NAHB/Wells Fargo Housing Market Index inched up to 56 in July from 55 in June. The slight increase matched economist estimates.
The housing market index increased for the seventh straight month, reaching its highest level since hitting 67 in June 2022.
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