Construction projects started in the hot US housing market jumped sharply in June, according to government data Tuesday, offering hope more homes will come on the market and ease the supply crunch.
Housing starts increased 6.3 percent compared to May surging to an annual rate of over 1.6 million units, seasonally adjusted, the Commerce Department reported.
And new construction of single-family homes also jumped 6.3 percent to nearly 1.2 million annualized, according to the report.
Any relief will be welcome in the US market which has boomed throughout the pandemic, driven by rock-bottom borrowing rates, which has sent home prices soaring and drained limited supplies.
However, new building permits issued in the month fell 5.1 percent, the data showed, which signals fewer homes in the pipeline in the industry squeezed by high material costs and a labor shortage.
“The drop in permits is more important than the jump in starts,” said Ian Shepherdson of Pantheon Macroeconomics.
“The bad news is that permits lead starts, and they are trending inexorably downwards, in the wake of the fall in new home sales.”
The South saw the biggest increase in new building while starts slowed in the Midwest, according to the data.
Compared to June 2021, housing starts are 29.1 percent higher, while building permits are 23.3 percent higher, the report said.