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Midwest Leads Drop in Home Construction, Permits

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Midwest and multifamily properties led a country-wide decline in new housing permits and new home construction. The West, meanwhile, kept the pace of completed construction from slowing nationally.

June saw 119,800 housing units authorized in permit-issuing places, according to data jointly reported by the Census Bureau and the Department of Housing and Urban Development.

Including last month’s activity, there were 670,800 U.S. housing permits issued for privately owned properties between Jan. 1 and June 30 of this year.

Applying seasonal adjustments, the annual rate of permit issuance was 1.273 million, off 2 percent from the previous month and 3 percent lower than the upwardly revised level for the same month in 2017.

“The soft permit report does not suggest a significant increase in housing production in the near term,” National Association of Home Builders Senior Economist Michael Neal noted in a statement.

On one-unit properties, last month’s seasonally adjusted rate of permit issuance was 0.850 million, up almost a percent from May.
But the multifamily rate sank 9 percent to 0.387 million.

The biggest drop from May was in the Midwest, where the seasonally adjusted overall annual rate of permits plunged 19 percent to 170,000. The Northeast’s rate sank 16 percent to 112,000, and the West was off 2 percent to 327,000.

Only the South showed resilience, climbing 6 percent to a 664,000 rate.

U.S. housing units authorized but not yet started numbered a seasonally adjusted 160,000 as of June 30.

Home builders began construction at a seasonally adjusted annual rate of 1.173 million last month. New construction tumbled 12 percent from
a downwardly revised 1.337 million a month earlier and an upwardly revised rate of 1.225 million a year earlier.

“We have been warning the administration for months that the ongoing increases in lumber prices stemming from both the tariffs and profiteering this year are having a strong impact on builders’ ability to meet growing consumer demand,” NAHB Chairman Randy Noel proclaimed in the statement

Keller Williams Chief Economist Ruben Gonzalez
explained in a statement that while builders will be challenged this year by rising construction costs and shortages of more desirable lots in some areas, “overall, we should continue to see construction trending up this year.”

Although one-unit new construction declined 9 percent from May, it plummeted more than 20 percent on multifamily properties.

New construction nosedived in the Midwest by 36 percent, while it sank by a fifth in the Northeast and fell 9 percent in the South. The smallest month-over-month decline was in the West: 3 percent.

As of mid-2018, there were a seasonally adjusted
1.121 million U.S. housing units started but not completed.

There were 113,500 housing units completed last month, bringing the year-to-date total to 581,600.

Last month’s seasonally adjusted annual rate of completed construction was 1.261 million, the same as the
downwardly revised rate for May. Completed construction was up, though, 2 percent from the upwardly revised level in June 2017.

Construction on one-unit properties was completed at a rate that was 2 percent lower than in the last report, while the multifamily rate moved higher by 7 percent.

Completed construction in the South fell 10 percent to a seasonally adjusted annual rate of 618,000, and the Midwest was down 4 percent to 166,000.

But the Northeast climbed 7 percent to a 98,000 rate, and a 21 percent surge recorded for the West left the rate there at 379,000.

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