US housing starts jump 17.3% in June

Washington

US home construction surged 17.3 per cent in June, said the Commerce Department, as the sector continued to gain ground following the disruption caused by the coronavirus pandemic.

The rebound in housing starts compared to May saw the north-east - home to the worst initial outbreak of Covid-19 - spike 114.3 per cent and the mid-west and south also grow, though starts were down 7.5 per cent in the west.

Construction was at a seasonally adjusted annual rate of 1.186 million, above analysts' forecasts. However, it was down 4 per cent from June 2019, according to the monthly data report.

The sector had started recovering in May after a steep decline in April, the first full month of business shutdowns to stop the spread of the coronavirus.

Growth in June was seen both in single-family housing starts, which were up 17.2 per cent, and in units of five or more, which rose 18.6 per cent.

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Permits, a sign of demand in the pipeline, grew 2.1 per cent from May fuelled by single-family authorisations, which rose 11.8 per cent while multi-unit permits decline. However, the number was 2.5 per cent below the same month in 2019.

The data "is only a bare, partial recovery", chief economist of the National Association of Realtors Lawrence Yun said in a statement, adding that the US needs at least 1.5 million new units to satisfy increased demand.

"The housing market is hot. Homebuyers have swiftly moved into the market to take advantage of the unimaginably low mortgage rates. But inventory is lacking with a sizeable backlog of buyers getting outbid by others," Mr Yun said.

However, Rubeela Farooqi of High Frequency Economics noted the average for both starts and permits was weaker in the first quarter than the second.

"Beyond a near-term bounce that reflects demand for more space as more and more people work from home, a desire to live in less densely populated areas as well as low mortgage rates, the outlook for housing is likely weak as job and income losses curtail activity," she said. AFP