Mixed Signals in June: US Housing Market Growing Increasingly Complex
Despite high interest rates, the unexpectedly strong permits and construction in June, coupled with a surge in completion, indicate the resilience of the US real estate market.
The US housing market released complex signals in June. According to the latest residential construction data, some indicators have exceeded expectations, while others show ongoing challenges.
Building permit exceeds expectations
In June, the number of building permits for private housing units reached 1.446 million, exceeding the expected 1.4 million. This is an increase of 3.4% compared to the revised 1.399 million sets in May. However, compared to June 2023, it still decreased by 3.1%, indicating a slowdown in planned construction compared to the same period last year.
Housing construction exceeds expectations
Housing construction in June also exceeded expectations, with a seasonally adjusted rate of 1.353 million units, higher than the predicted 1.3 million units. This is an increase of 3.0% compared to the revised 1.314 million sets in May. Despite the month on month growth, it still decreased by 4.4% compared to June 2023, indicating that the pace of new construction activity has also slowed down compared to last year.
Surge in number of completed projects
The most significant change in the June report is the significant increase in the number of completed housing projects. After seasonal adjustment, the number of completed units is 1.71 million, an increase of 10.1% compared to the revised estimate in May, and a significant increase of 15.5% compared to June 2023. The significant increase in the number of completed projects may help alleviate some supply constraints in the housing market.
Weak performance of single-family residential sector
Despite improvement in overall figures, single-family residential sector shows signs of weakness.Single-family housing construction has decreased by 2.2% compared to May, while single household permits have decreased by 2.3%. This indicates potential resistance in this critical area of the housing market.
Market forecast
Based on these complex signals, the short-term outlook for the US housing market tends to be cautiously optimistic.
The strong performance of building permits and unexpected housing starts, as well as the surge in completion numbers, indicate that the market remains resilient under the pressure of high interest rates. However, the weakness of the single family housing sector and the annual decline in permits and construction volumes require close attention.
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