Construction of new homes rose 4.8 percent in June

Construction of new homes picked up pace in June and got a boost from large gains in the Northeast and West.

Housing starts posted a healthy 4.8 percent gain last month to a seasonally adjusted annual rate of 1.19 million units as the housing market gains steam this year, the Commerce Department reported on Tuesday.

{mosads}”The June report is consistent with our forecast for a gradual but consistent recovery of the housing market,” said Robert Dietz, the National Association of Home Builders’s chief economist. 

“Single-family production should continue to strengthen throughout the year, buoyed by job growth, new household formations and low mortgage interest rates,” Dietz said. 

Permits for building, a forward looking indicator, also increased and were up 1.5 percent to a seasonally adjusted annual rate of 1.15 million, another positive sign for the housing sector. 

Builders have been trying to increase construction to meet rising demand in a market hampered by lack of inventory in new and existing homes.

“This month’s uptick in production is an indicator that the housing market continues to move forward,” said Ed Brady, chairman of the NAHB and a home builder and developer from Bloomington, Ill. 

Still, builders are moving ahead cautiously has they face a shortage of lots and regulatory hurdles.

Near record-low mortgages rates — hovering around the 3.4 percent range for a 30-year-fixed loan — are driving more demand.

Single-family housing starts rose 4.4 percent to a seasonally adjusted annual rate of 778,000 units in June, while multifamily production ticked up 5.4 percent to 411,000 units.

Regionally, combined single- and multi-family starts increased in the Northeast 46.3 percent and 17.4 percent in the West. The Midwest posted a 5.2 percent loss and the South fell 3.4 percent.

However, single-family production rose in all four regions.

Both sectors posted permit gains.

Single-family permits edged up 1 percent to a rate of 738,000, while multifamily permits were up 2.5 percent to 415,000.

Permit issuance increased 9.4 percent in the Northeast and 8.3 percent in the South.

Meanwhile, the Midwest and West registered respective losses of 2.8 percent and 10.1 percent.