The June residential-construction report landed Friday, and the headlines wrote themselves: housing starts up 19.0%, to a 1,427,000 annual rate, the highest since March [2]. The number is real. What it measures, for anyone hoping to buy a home, is not.
Break the 19% apart and it is almost entirely apartment buildings. Multifamily starts - buildings of five units or more - jumped 76.3% in June, to a 513,000 annual rate [2]. Single-family starts, the houses that show up in a buyer's search results, went the other way: 895,000, down from 897,000 in May and 3.2% below June of last year [1]. Of the roughly 228,000-unit monthly increase, about 97% was apartments [1][2].
The forward signal is softer still. Building permits, the report's leading indicator, fell 3.0% overall, and single-family permits dropped 2.4% to 871,000 [1]. Builders are asking for less permission to build the next round of houses, not more.
The people watching this closely are not celebrating. Realtor.com senior economist Jake Krimmel said the 'tepid permitting readouts do not inspire confidence in the country's ability to close' the roughly 4 million home supply gap [1]. NAHB chairman Bill Owens pointed at the cause: 'Elevated mortgage rates and higher construction financing costs continued to weaken builder confidence and housing demand' [1].
A surge in rental blocks stacked on a shrinking ownership pipeline is a real story about the housing market - it is just the opposite of the one the boom headlines told [1][2].
