Data released today showed that Housing Starts dropped 0.9% in June. While still subdued, activity should steadily improve in the second half of the year, explained Wells Fargo analysts.
Key Quotes:
“New residential construction continues to be fairly sluggish. Total housing starts declined 0.9% during June, dragged down by a sharp 9.2% decline in the volatile multifamily segment. Single-family construction fared better and rose a solid 3.5%. Single-family building has now improved in three of the past four months.”
“On a year-to-date basis, total starts are still running 3.7% below last year’s pace. Builders have contended with several weather-related challenges this year, which likely caused delays and depressed overall activity.”
“We expect a slow and steady improvement in residential construction for the remainder of the year. Starts slowed markedly in the second half of 2018 alongside rising mortgage rates and sluggish new home sales.”
“A steep 6.1% drop in total building permits during June may raise some eyebrows, however multifamily permits accounted for the entire decline.”
“Builders steadily regaining confidence also points to further improvements in coming months. The NAHB Housing Market Index edged up to 65 during July, with both present and future sales, as well as prospective buyer traffic, gaining one point during the month. Despite remaining below the sky-high levels of last year, the topline index has improved in six of the past seven months, and gained nine points since last December’s collapse.”
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