New Home Starts Up and Down in June; Builder Confidence Dropping

There was good news and bad news released this week for home builders in Phoenix, Arizona and the nation. The good news is that the expected drop in June’s single-family new home starts didn’t really happen. In fact it was essentially unchanged from a month before, which could indicate that the plunge in new home construction has reached the bottom and is leveling off.

Perhaps this news will perk up the confidence of Arizona home builders. The National Association of Home Builders released the July Housing Market Index showing a drop in builder confidence from previous months. This reflects the slow market that builders are seeing and shows that their perception of the market is very bad. Anything below 50 is considered low.

There is more bad news about what else has dropped. A steep plunge of over 21% in multi-family housing starts pulled the overall rate down to a lower-than-predicted level. Many economists forecasted combined June housing starts would drop to 550,000. Actual numbers came in about 10,000 below that estimate, for an overall drop of 5%.

Graph of New Home Starts

This drop was expected after the end of the home buyer tax credit, however economists are now hoping that the slight drop of only 0.7% in single family home starts is a sign of better things to come.

On the flip side, permits for new housing starts increased just over 2% in June. This number reflects a drop in single family housing permits but a 19% increase in multi-family permits. The Northeast and the West saw healthy increases in combined permits while the Midwest and the South both saw significant drops.

June housing permits could be an indicator of July’s housing starts, although many are reflected in June’s numbers.

According to the NAHB, “about half of single family homes are started the same month that the permit is issued” and nearly all are started within two months. About one-third of multi-family units are started in the same month. A housing start is defined as the beginning of excavation for the footings or foundation of both single family and multi-family buildings. This is commonly referred to as “ground breaking.”

If you are hunting for a new home or even the perfect patch of land to build on, the Curtis Johnson team can help. Contact the Curtis Johnson team, go to www.CurtisJohnsonRealty.com or call 1-888-Curtis-J.

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