Construction Activity Slips in June

By Mark Lieberman

Managing Director and Senior Economist


  • The rate of housing starts in June FELL 12.3 percent to a seasonally adjusted annual rate (SAAR) of 1.17 million units;
  • The pace of single-family starts DROPPED 9.1 percent and multi-family starts TUMBLED 19.8 percent from May levels;
  • The rate of permits for new homes filed in June also FELL, down 2.2 percent to an SAAR of 1.27 million units;
  • The rate of permit filings for multi-family homes ROSE 0.8 percent in June while permits for multi-family housing units FELL 7.6 percent;
  • The rate of home completions in June was UNCHANGED from May as the 5.3 percent month-month increase in the rate of multi-family rate of completions offset the 2.3 drop in the pace of single-family home completions.


  • Housing permits (single-and multi-family) have now declined three months in a row and the SAAR is at its slowest pace since last September;
  • Permits for single-family homes represented 66.8 percent of all permits in June, up from 64.8 percent in May;
  • At the same time, single-family homes accounted for 73.1 percent of all starts, the highest share since last August.

Data Source: Census Bureau and Department of Housing and Urban DevelopmentĀ 

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With the cost of home-building materials increasing, permits and starts for the construction of new homes fell to the lowest level in nine months.

Whether the decline was indeed due to higher material prices or demographics is uncertain. Studies by the Joint Center for Housing Studies at Harvard and Freddie Mac suggest millennials are not buying homes at the same pace as their parents, a factor builders may take into consideration before applying for a building permit or putting a shovel in the ground.

And, even before the most recent round of tariffs called for by President Trump, the cost of 1,000 board feet of western Canadian lumber is up nearly 80 percent over the past 12 months, including about 40 percent this year, according to data from Random Lengths, a publication that covers the lumber market.

Add to that the tariff-driven increase in steel and aluminum and the building costs could put the cost of a new home out of reach for younger buyers who themselves could be struggling with student loans.

Rolled together, that could explain why the Housing Market Index, a measure of builder confidence, was flat in July as an increase in buyer traffic offset a drop in the outlook for sales six months out.

The report on permits and starts also suggested some relief for inventories as the report also noted the pace completions of single-family homes slipped slightly in June.

Hear Mark Lieberman every Friday at 6:20 am on POTUS Morning Briefing, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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