New housing starts in the US jumped 19% in June: multi-family housing starts surged 76% to “support the scene”, and the chill in single-family homes has not subsided and stagnated

The Zhitong Finance App learned that new housing starts in the US jumped 19% month-on-month in June, but the strong performance was all driven by fluctuating apartment projects, while single-family housing starts and construction permits continued to decline, highlighting that high interest rates, high inventories, and uncertainty brought about by the Middle East conflict continue to suppress residential investment.

According to data released by the US Department of Commerce on Friday, the annualized growth of new housing starts in June increased by 19.0% month-on-month, and the discount rate rose to 1,427,000 units (about 1.43 million units), hitting a three-month high and far exceeding market expectations. However, this rebound was almost entirely driven by multi-family housing: the commencement of apartment projects with five or more units soared 76.3% month-on-month to an annualized rate of 513,000 units, and plummeted by nearly 40% last month. This fully reflects the high monthly fluctuation characteristics of multi-family housing data. At the same time, high housing prices and high mortgage interest rates are also driving part of the demand for home purchases into the rental market, providing support for apartment construction.

In stark contrast to this, single-family housing starts, which account for the majority of residential investment, fell slightly by 0.2% month-on-month to 895,000 units per annum, down 3.2% year on year, and declined again after an overall deserted spring. Single-family home builders continue to face the double pressure of high inventory of unsold new homes (close to the level at the end of 2007) and weak demand, and have to generally increase sales incentives. According to a survey by the National Association of Home Builders (NAHB), the confidence of single-family home builders remained sluggish in July. The industry attributed the reasons to economic uncertainty brought about by the Middle East conflict, rising material and land costs, and still high mortgage interest rates.

The forward-looking indicators are even cooler. Overall construction permits in June fell 3.0% month-on-month to an annualized rate of 1.367 million units, the lowest since March. Among them, single-family housing permits fell 2.4% month-on-month to 871,000 units, a 10-month low, down 0.2% year on year; multi-family housing permits also fell 4.9% month-on-month to 445,000 units. As a leading indicator for future construction, the overall decline in licensing data indicates that subsequent construction activities may cool down again.

Analysts believe that high mortgage interest rates continue to suppress purchasing power. According to Freddie Mac data, interest rates on 30-year fixed mortgages have climbed nearly 60 basis points since the US and Israel jointly attacked Iran at the end of February, hitting an 11-month high of 6.55% this week. In this context, the Atlanta Federal Reserve's GDPNow model previously predicted that residential investment would contribute very little to GDP in the second quarter.

From a regional perspective, there was a general increase in new housing starts in major regions in June. Construction starts in the south, the largest housing region in the US, increased 15.2% month-on-month, mainly driven by multi-family projects; construction volume in the Midwest climbed to the highest level since 2024.

On the policy side, industry research analyst Drew Redding pointed out in a briefing this week that the recently passed “21st Century Housing Road Act” (bipartisan housing affordability legislation) is viewed as a long-term benefit, particularly beneficial to post-construction rental communities and factory housing developers, and includes provisions that restrict large-scale acquisitions of single-family homes by investment companies and accelerate or exempt environmental reviews for some projects. However, since it takes time for the relevant provisions to be implemented, the analyst believes that it will be difficult to substantially improve the industry's plight in the short term. Notably, the bill automatically became law even when President Trump did not sign it. At the time, Trump asked Congress to pass an independent voting bill first.

At the same time, the government report indicates that the monthly new housing starts data fluctuates greatly. The overall change in June was between 3.1% and 34.9% within the 90% confidence range, and there is still a possibility of major revisions in the future.