Total Housing Starts Rise in June

The seasonally adjusted annualized rate of building permits issued nationwide for new housing construction rose to its highest level of the past four months during June. The annualized rate of 1.7 million units permitted was 1.4% above the revised May total. The June 2002 permit total was 5.1% higher than during the same month of 2001.

The permit pace rose during June in the South (+4.8%) and Midwest (+1.5%) but declined in the Northeast (-4.6%) and West (-2.2%). From May to June, single-family home permit volume was up 1.7%, while the pace of multifamily work permitted inched ahead 0.7% after a much sharper gain (+9.4%) in May. Through the first six months of this year, total permit volume nationwide was running 2.0% ahead of the total for the first six months of 2001. Single-family permit volume was 3.6% greater through the first half of 2002 than during January-June of last year, while the number of units newly permitted in multifamily buildings was running 3.5% behind the 2001 pace.

Housing starts declined for the third time in the past four months during June. After a sharp 10.8% surge in total starts from April to May, activity faded a bit during June but remained strong by any reasonable measure of comparison. The annualized pace of total housing starts fell by 3.6% from May to June to bring the level down to 1.672 million units. This was a building pace still 2.4% stronger than in June 2001, and better than the monthly pace for more than half of the intervening months during the past year.

Single-family homes were started at a rate 2.9% lower in June than during May. And new multifamily construction starts faded 6.7% over the month, after a gain of more than 13% the month before. Total June 2002 single-family starts (after seasonal adjustment) were 4.4% stronger than in June 2001, but the multifamily sector recorded an over-the-year loss of 5.3%.

During the first six months of this year, overall housing starts totaled an estimated 840,100 units. This was 3.9% greater than during January-June 2001. Although the multifamily sector failed to grow (declining by 0.4% from the first six months of last year to the first half of 2002), starts of single-family homes increased by 5.0%.

The starts pace fell in three of the four regions of the country from May to June, with the Northeast being the exception. Starts declined most steeply (by 7.6%) over the month in the South. However, through the first six months of 2002, total starts were up at least a bit compared with the year-ago pace in all regions: Northeast (+9.0%), South (+4.8%), Midwest (+0.4%) and West (+0.2%).

Thirty-year fixed-rate mortgages carried an average interest rate of 6.65% this June, down from the 7.16% average of June 2001. Adjustable-rate mortgages tied to the yield on one-year Treasury bills averaged an interest rate of 4.65% during June of this year, well below the 5.81% average recorded during June 2001.

Single-family home sales remained healthy through the first-half of this year. Through the first six months of 2002, overall single-family home sales were running 5.6% ahead of the total for January-June 2001.

New single-family home sales (at a seasonally adjusted annualized rate) were estimated to be 0.5% stronger in June of this year than during May. But the June 2002 annualized sales pace was more than 12% healthier than during June 2001. The Commerce Department estimates that sales of new homes throughout the nation during the first half of this year was 2.7% greater than during the first six months of 2001. Although the number of new single-family homes sold so far this year has declined slightly in the South and Northeast, this has been more than offset by the strong increases in the West and Midwest. The average sales price of a new home sold this June was 4.4% higher than in June 2001, and the median price was up about 2%. Although price appreciation has slowed a bit in recent months, there's still no sign that a presumptive market "bubble" is about to "burst."

Existing single-family homes sold at an annualized rate of 5.07 million units during June of this year, according to data compiled by the National Association of Realtors. This was a pace 11.7% lower than in the month before and the weakest performance for the home resale market since September of last year. Compared with June 2001, existing home sales this June were off 4.3%. However, resales had been running at a record-high pace through the first five months of 2002, so the year as a whole is still well ahead of 2001. The NAR estimates that overall sales of existing single-family homes throughout the first half of 2002 were 6.1% greater than during January-June 2001. The median price of an existing home sold during June 2002 was $163,500, while the average price of a resale was $211,000. These prices represented gains of 7.4% and 10.4%, respectively, over the values recorded during June 2001.