The pace of U.S. home building fell more than expected in June as groundbreaking on single-family units logged the slowest pace in 1-1/2 years, according to a government report on Wednesday that added to signs of a broad cooling in the housing market.
The Commerce Department said June housing starts fell 5.3 percent in June to a 1.850 million unit annual pace, from a downwardly revised 1.953 million unit pace in May. May’s rise had interrupted a string of three straight monthly declines.
Economists had expected June housing starts to decline to 1.90 million units from May’s originally reported 1.957 million unit pace.
Permits for future groundbreaking, an indicator of builder confidence, fell 4.3 percent to a 1.862 million unit pace, the slowest since May 2003. Economists polled by Reuters had expected June permits to fall to 1.920 million units after an upwardly revised 1.946 million units, originally reported as 1.932 million.
U.S. single-family housing starts fell 6.5 percent to an annual pace of 1.486 million units, the slowest since November 2004.
Single-family housing starts in the U.S. Northeast plunged 32.8 percent to a 92,000-unit annual pace in June, registering their biggest monthly drop since March 1984 and the slowest annual pace since January 1996.
Total Northeast housing starts fell 11.5 percent in June, while total Northeast permits rose 6.1 percent, driven entirely by multi-family plans as Northeast single-family permits fell 3.9 percent in June.
In the West, total housing starts fell 10.2 percent, with single-family starts down 5.9 percent, and total permits down 7.6 percent. June housing starts in the South fell 4.0 percent, while permits fell 5.3 percent. In the Midwest, June housing starts rose 3.0 percent, but permits dipped 1.6 percent.
Construction of multifamily buildings, which had been showing some lingering signs of strength in recent months, were weaker in June, as starts for buildings with five or more units fell 4.1 percent to an annual rate of 306,000. Permits for such buildings, however, rose 6.1 percent to annual pace of 397,000.
The data comes a day after a confidence index for U.S. home builders plummeted to its lowest level in more than 14 years in July as buyers canceled contracts and investors pulled back from housing.
The National Association of Home Builders said sentiment among home builders dropped 3 points to a reading of 39 in July, below forecasts from economists and the lowest since December 1991, when the U.S. was emerging from a recession.