Starts (NHSPSTOT) of new U.S. homes unexpectedly fell in June to the lowest level in almost a year, indicating a pause in the industry’s progress.
Work began on 836,000 houses at an annualized rate last month, the least since August 2012 and down 9.9 percent from a revised 928,000 pace in May, figures from the Commerce Department showed today in Washington. The reading was weaker than projected by any economist in a Bloomberg survey, and permits for future projects also declined.
The decline was led by a slump in multifamily projects, which can be volatile, and the level of permits remained higher than starts, which may point to a rebound this month. A limited supply of land is also a hurdle for housing, even as near record-low mortgage rates and improving job opportunities draw buyers.
“Housing will continue to grow, but it will be at a gradual pace,” Sean Incremona, a senior economist at 4Cast Inc. in New York and the top forecaster for housing starts in the past two years, according to data compiled by Bloomberg, said before the report.
Federal Reserve Chairman Ben S. Bernanke today said the central bank’s $85 billion in month asset purchases geared toward spurring growth “are by no means on a preset course” and could be reduced or expanded as economic conditions warrant.
Major Miss On Housing Starts
Housing starts fall in June, raising slowdown fears
Farewell “Housing Recovery” – Housing Starts Miss Most Since January 2007, Permits Have Biggest Miss In History
In all the noise surrounding Bernanke’s rehash of statements made countless times before, today’s only relevant data point – June housing starts and permits – was largely ignored. And one can see why: printing at 836K, the starts number was the biggest miss to expectations of 957K since January 2007, and the second largest sequential drop (down from 928K in May) since 2011!
And worse, permits which printed down from 985K to only 911K on expectations of a 1 million headline number, just posted their largest miss… in history.
As for the reason? Simple: as we have been warning, Wall Street’s infatuation with housing as a flippable investment asset, praying that a greater fool has cheaper access to credit and will thus buy up all the diestressed property, just evaporated manifesting itself in a 27% drop, or 86K units, in multifamily housing, which plunged back to September 2012 levels or 236,000. And while single-family units never actually benefited from the “housing recovery”, as the REO-to-Rent scheme never involved actual houses, the decline in single-family housing continued for the 4th month in a row, dropping to only 591K, or the lowest since November 2012.