Housing starts in June jumped to a seasonally adjusted annual rate of 629,000, 14.6% ahead of a revised May estimate of 549,000 and 16.7% above the June 2010 rate of 539,000, the Commerce Department reported Tuesday. The percentage increase was boosted significantly by the May revision, which was lowered from the rate of 560,000 originally reported.
The rate beat the Wall Street estimate of a rate of 575,000.
Unadjusted, starts rose to 62,900 from 53,300 in May and 53,800 last June.Single-family starts rose 9.4% to a seasonally adjusted annual rate of 453,000; multifamily was up 31.8% to a rate of 170,000. Unadjusted, single-family starts rose to 45,300 from 40,600 in May and were flat with 45,500 in June, 2010.
Regionally, starts in the Northeast were driven up sharply by multifamily.The overall increase in starts was up 35.1% sequentially and 28.3% year-over-year to an annual rate of 77,000, but single-family was up only 2.6% to 39,000, 20.9% behind June last year. The gains in the Midwest were more balanced, with starts up 25.3% overall to a rate of 124,000 and 22.5% for single family to 87,000, up 45.9% and 22.5% respectively from June a year earlier. The South was up 10.6% overall to a rate of 292,000, 2.1% above June last year, and up 8.6% in single-family to a rate of 239,000, 0.8% ahead of last years pace at the same time. The West was up 5.4% overall to 136,000, 25.9% above last June, and up 3.5% to 88,000, a drop of 6.4% from June, 2010.
Permits were up modestly, rising 2.5% to a seasonally adjusted annual rate of 624,000, 2.5% above the revised May rate of 609,000 (down from 612,00) and 6.7% above the June 2010 estimate of 585,000.
Permits were driven by an 8.2% rise in multifamily, with single-family authorizations up a scant 0.2% to a rate of 407,000, which was 3.8% behind June last year.
Permits were uneven regionally. Permits were down 10% in the Northeast to an annual rate of 72,000 overall and down 2.8% to 35,000 for single-family, declines of 2.8% and 25.5% respectively. The Northeast is normally more volatile than other regions due to a small research sample size. The Midwest was up 5.2% to 102,000 overall and up 4.5% for single-family to 70,000, up 6.3% and down 5.4% respectively on a year-over-year basis. The South was up 5.5% overall to a rate of 309,000 but flat at 218,000 for single-family, also up 5.5% and flat year-over-year. The West rose 1.4% overall to 141,000 but was down 1.2% in single-family to 84,000, up 20.5% and flat respetively with June of last year.
Adam Rudiger, home-building analyst at Wells Fargo focused on the upward impact multifamily had on the report. In a research note, he said, "While the headline 14.6% sequential increase in total starts is likely to generate some modestly positive sentiment, we view today's release with less optimism. From a single-family perspective, the increase in starts was more muted, at plus 9% sequentially, and yr/yr starts were flat despite the lack of the tax credit benefit in the comparable period data. Further, single-family permits, which tend to be a leading indicator for starts, were flat sequentially and down 3.8% yr/yr."
Rudiger pointed out that during the past 10 years, actual single family starts January through June represented an average of 52% of total SF starts for the year. Using that metric, he caluculated that there would be 412,000 single-family starts in 2011, down 12.5% year-over-year down less than the 15% drop the analysis predicted in May.