After reporting a steep drop in new residential construction in the U.S. in the previous month, the Commerce Department released a report on Tuesday unexpectedly showing a continued decline in housing starts in the month of June.<\/p>\n
The Commerce Department said housing starts slumped by 2.0 percent to an annual rate of 1.559 million after plunging by 11.9 percent to a revised rate of 1.591 million in May.<\/p>\n
The continued decrease came as a surprise to economists, who had expected housing starts to jump by 2.3 percent to an annual rate of 1.585 million from the 1.549 million originally reported for the previous month.<\/p>\n
With the unexpected decline, housing starts dropped to the lowest annual rate since hitting a matching rate in September 2021.<\/p>\n
Housing starts continued to fall as an 8.1 percent nosedive in single-family starts more than offset a 10.3 percent spike in multi-family starts.<\/p>\n
The report showed building permits also fell by 0.6 percent to an annual rate of 1.685 million in June after tumbling by 7.0 percent to a rate of 1.695 million in May.<\/p>\n
Building permits, an indicator of future housing demand, were expected to slump by 2.7 percent to an annual rate of 1.650 million.<\/p>\n
The smaller than expected decrease in building permits came as an 8.0 percent plunge in single-family permits was partly offset by an 11.5 percent surge in multi-family permits.<\/p>\n
“We expect housing starts to lose some momentum as 2022 progresses, but the June starts data and the July plunge in homebuilder sentiment suggest a clear downside risk to our forecast,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.<\/p>\n
The National Association of Home Builders released a separate report on Monday showing a substantial deterioration in U.S homebuilder confidence in the month of July.<\/p>\n
The report showed the NAHB\/Wells Fargo Housing Market Index plunged to 55 in July from 67 in June. Economists had expected the index to edge down to 66.<\/p>\n
The HMI showed its second biggest single-month drop after a 42-point nosedive in April 2020, tumbling to its lowest level since May 2020. <\/p>\n