Policymakers should focus on lowering housing costs by removing burdensome regulations and easing permitting roadblocks, said one real estate expert.
The number of houses that began construction rose in June from the previous month, driven by strong growth in the multifamily segment, the Census Bureau said in a July 18 statement.
Privately owned housing starts in June were at a seasonally adjusted annual rate of 1,321,000 units, a 4.6 percent jump from May. On an annual basis, housing starts were down 0.5 percent.
Region-wise, the Northeast saw housing starts jump by 73.3 percent month-over-month to 182,000 units from May’s 105,000 units, while other regions registered declines of 0.7 percent to 5.3 percent.
The overall starts were boosted by strong multifamily construction, with the sector seeing a growth of 30.6 percent on a monthly basis.
In contrast, single-family starts fell by 4.6 percent, raising concerns among developers.
In a July 18 statement, the National Association of Home Builders (NAHB) said the decline in single-family housing starts was due to rising inventories, elevated interest rates, and supply issues weighing on the housing sector.
“Single-family building conditions continued to weaken in June as housing affordability challenges caused builder traffic to move lower as buyers moved to the sidelines,” said Buddy Hughes, chairman of NAHB.
The average weekly rate on a 30-year fixed-rate mortgage was 6.75 percent for the week ending July 17, according to data from Freddie Mac. The rate has consistently remained above 6.5 percent for every single week this year. Since mid-September 2022, rates have remained above the 6 percent level.
Meanwhile, the median sales price of new homes sold in the United States was $426,600 in May, according to data from the Federal Reserve Bank of St. Louis. Prices have been moving in a range of around $460,000 to $397,000 since October 2022.
The high costs to buy a new home, coupled with elevated mortgage rates, dampen the interest of many prospective buyers, keeping them at bay. The demand has declined for single homes, which has impacted housing start numbers.
“Policymakers need to focus on easing high housing costs by eliminating burdensome regulations, promoting careers in the skilled trades, alleviating permitting roadblocks and overturning inefficient zoning rules,” Hughes said.
