Multifamily dip drives housing starts lower in June

"While demand for new homes and apartments has grown considerably over the past year, builders are still being very careful not to get ahead of the market, and today's report reflects that cautious approach," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C., in a release.

"The large dip in multifamily production in June follows a boost of activity in May, and is consistent with the volatility that has come to characterize that sector as well as the uneven pace of the housing recovery," said NAHB chief economist David Crowe. "That said, the fact that single-family starts and permits both rose in three out of four regions in June is a positive sign that's in keeping with our forecast as well as recent surveys in which single-family builders have registered an increasingly positive outlook."

The annualized rate of multifamily production declined 26.2 percent to 245,000 units in June after a 28.2 percent gain in the previous month. Meanwhile, single-family construction slipped by 0.8 percent to a 591,000-unit pace. Regionally, combined starts activity declined 12.1 percent in the Northeast, 7.4 percent in the Midwest, 12 percent in the South, and 5.4 percent in the West in June.

Building permits, which are an indicator of future building activity, declined 7.5 percent to 911,000 units in June. This was due entirely to a pullback in the multifamily sector, where permits fell 21.4 percent to 287,000 units. Single-family permits registered a marginal 0.6 percent gain to 624,000 units—the best pace in five years.

Regionally, permit issuance was down 4.6 percent in the Midwest, 11.2 percent in the South, and 7.2 percent in the West, but rose 5.9 percent in the Northeast in June.