How will housing starts downturn impact the housing market?

The monthly decline was driven by a slide in single-family starts – down 8.1% month over month to 982,000 units. Meanwhile, the rate for multifamily homebuilding in June was 568,000.

“Single-family starts are retreating on higher construction costs and interest rates, and this decline is reflected in our latest builder surveys, which show a steep drop in builder sentiment for the single-family market,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB). “Builders are reporting weakening traffic as housing affordability declines.”

“While the multifamily market remains strong on solid rental housing demand, the softening of single-family construction data should send a strong signal to the Federal Reserve that tighter financial conditions are producing a housing downturn,” added NAHB chief economist Robert Dietz. “Price growth will slow significantly this year, but a housing deficit relative to demographic need will persist through this ongoing cyclical downturn.”

Overall, building permits posted a 0.6% dip to an annualized rate of 1.69 million. Housing completions in June also declined to 1.37 million units, a 4.6% drop from 1.43 million in May.