ConDig (20-July-23).  Construction of new homes in the United States edged down in June after four straight monthly gains, while permits for future construction of single-family homes increased, according to a report from the U.S. Census Bureau.

Overall housing starts in June crumbled 8% to a seasonally adjusted annual rate of 1.43 million units, which is the number of housing units builders would begin if development kept this pace for the next 12 months. 

The drop comes amid high construction costs and surging mortgage rates that has fueled a reduction in home building activity and affordability conditions have worsened for buyers, according to the National Association of Home Builders (NAHB).

Single-family starts tumbled 7% to a 935,000 seasonally adjusted annual rate. Single-family starts were also 7.4% down on a year ago. The multifamily sector, which includes apartment buildings and condos, fell 9.9% to an annualized 499,000 pace.

“Housing starts posted a monthly decline in June as tightening monetary policy helped push mortgage rates up more than a quarter-point over the past month,” said Alicia Huey, chairman of the NAHB. 

“Policymakers need to remove regulatory bottlenecks that impede the housing industry’s ability to increase the production of quality, affordable housing.”

But the association said it expected interest rates will stabilize as they approach 7% and this could bring home buyers back to the market as affordability conditions improve. 

Despite the drop, single-family permits registered their highest pace since June 2022, with permits rising 2.2% to a 922,000 unit rate, but are down 21.5% year-to-date.