Steel Markets

Home Construction Ends Second Quarter with Solid Gains

July 19, 2020

Housing starts in June jumped 17.3 percent from May to a seasonally adjusted annual rate of 1,186,000. Single-family starts jumped 17.2 percent and multi-family construction leapt 18.6 percent.

Regionally, housing starts soared 114.3 percent in the Northeast and climbed 29.3 percent in the Midwest and 20.2 percent in the South. Housing starts declined by 7.4 percent in the West. Single-family housing starts expanded across all four regions with the highest growth in the Northeast at 111.8 percent.

“Fueled in part by record low mortgage rates, builders are seeing solid demand for housing despite the challenges of the virus and elevated unemployment,” said National Association of Home Builders Chairman Chuck Fowke. “Demand is growing in lower density markets, including exurbs and small metros.”

Permit authorizations rose 2.1 percent from May to a SAAR of 1,241,000. Single-family permits rose 11.8 percent month-over-month while multi-family permit authorizations fell 14 percent. Permit authorizations were up 10 percent in the Northeast and Midwest, but contracted in the South and West.

“Single-family construction is expanding off April lows due to lean inventories of new and existing homes,” said NAHB Chief Economist Robert Dietz. “However, builders face challenges in growing costs, particularly rising prices for lumber.”

Year-to-date data, compared to the same period last year, shows combined single-family and multifamily starts are 2.2 percent higher in the Midwest, 0.2 percent higher in the South, 2.9 percent higher in the West and 5.4 percent lower in the Northeast. Regional permit authorizations for the period were 3.4 percent higher in the South, 8.8 percent lower in the Northeast, 2.3 percent lower in the Midwest and 3.9 percent lower in the West.

The housing data supports the latest survey by NAHB/Wells Fargo Housing Market Index. The July HMI showed builder confidence for single-family home construction jumped 14 points to register 72, a solid pre-pandemic reading, said NAHB.

“Builders in the Northeast and the Midwest are benefiting from demand that was sidelined during lockdowns in the spring,” said Fowke. “Low interest rates are also fueling demand, and we expect housing to lead an overall economic recovery.”