{"id":143939,"date":"2022-07-25T08:34:45","date_gmt":"2022-07-25T14:34:45","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=143939"},"modified":"2023-08-08T14:19:38","modified_gmt":"2023-08-08T20:19:38","slug":"housing-starts-fell-again-june","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/housing-starts-fell-again-june","title":{"rendered":"U.S. Housing Starts Fell Again In June: What It Means For Investors"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC3712174322&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Builders nationwide are warning real estate investors that new construction in the U.S. could be entering another phase of decline after showing continued growth since the end of the Great Recession. Privately owned housing starts had their slowest month since September 2021, dipping 2% month-by-month since May. According to the June&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.census.gov\/construction\/nrc\/pdf\/newresconst.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">U.S. Census Bureau Report<\/span><\/a><span data-preserver-spaces=\"true\">, housing completions also slowed down in June, showing a 4.6% decline.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1168\" height=\"450\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/fredgraph-10.png\" alt=\"us housing starts june\" class=\"wp-image-143940\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/fredgraph-10.png 1168w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/fredgraph-10-300x116.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/fredgraph-10-1024x395.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/07\/fredgraph-10-768x296.png 768w\" sizes=\"auto, (max-width: 1168px) 100vw, 1168px\" \/><figcaption class=\"wp-element-caption\"><em>New Privately-Owned Housing Units Started: Total Units &#8211; <a href=\"https:\/\/fred.stlouisfed.org\/series\/HOUST\" target=\"_blank\" rel=\"noreferrer noopener\">St. Louis Federal Reserve<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">The most dramatic slowdown is being observed in the single-family sector. Here, the dip in housing start numbers is much more dramatic than the average\u2014a significant 15.7% below June&#8217;s figures. Building permits were also down by 8%, which is the strongest indicator that future construction in this sector is in jeopardy.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Completion numbers are also lagging, with 1.68 million units started but not completed as of July. The construction industry is still reeling from months of labor and material shortages, with the supply of timber especially hard-hit. Slow completion rates and the many difficulties builders face, such as inflation and tightened and varied regulations across states, are creating a knock-on effect where future construction will also be subject to continued delays and shortages, but perhaps even worse than it&#8217;s been.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Multifamily Starts Showing Strength<\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Not all housing starts are falling uniformly. Currently, housing start figures are being evened out by the multi-family sector, the only sector where numbers are improving. Housing starts of five units and more leaped by 15% in June, up 16.4% year-over-year. Real estate investors should pay attention to this specific trend because it will likely continue into the foreseeable future.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There is a shortage in the multi-family rented housing start sector, though. With single-family rents rising steeply, the appeal of multi-family rented home construction is increasing, buoying up this construction segment. So, while overall&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/us-housing-market\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">buyer traffic is beginning to tick down<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;thanks to record home prices and rising interest rates, multi-family building is on the up, offering buyers a highly sought-out alternative to unsustainable rent levels.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This is highly likely to become a longer-term trend for families seeking affordable housing options nationwide. Remember: the pandemic has made vast swathes of the population more mobile and has created an appetite for moving to areas with more affordable housing. The multi-family housing start model is a model for the future and will only become more in-demand with time.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Will the significant pull-back from the single-family sector cause a nationwide housing market decline? In a word, no. Firstly, it\u2019s important to factor in regional variations. The decline in single-family new construction and permits is uneven geographically. The Midwest is actually experiencing an increase in single-family housing starts, while other regions, notably the Southwest, are declining.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This suggests that the single-family segment is volatile but that the downward trajectory is not uniform and is likely to be impacted more by regional socio-economic factors than by a systemic decline. Investors will need to pay close attention to regional differences and what they mean for future investment prospects in the single-family segment.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The other important thing to remember is that even with a steady decline in housing starts and building permits, home prices will not crash. In many ways, the \u201cnew normal\u201d housing market conditions of the pandemic have skewed perceptions of what housing market growth ordinarily looks like.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The near-20% home price increases we\u2019ve been seeing during the last two pandemic years were never here to stay. The 7-8% growth levels we see now are closer to pre-pandemic market conditions, which were still auspicious. Even with a decline in home price growth, home prices are still rising, so they won\u2019t dip below profitable levels any time soon.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Note to Investors<\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Every investor should bear in mind the continuing shortages in the housing sector. This shortage will not ease any time soon; in fact, we\u2019ve been short for over a decade. It\u2019s not going to suddenly change this summer, which means that the housing market will remain stable and home prices will remain elevated.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_bd60b23ca63a6558091b38d2488cf00b\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_e0000b30f1c4db0d70d1a9c6e27fff41\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_508b7819ed7405f652c2b7b2683a3e7e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/housing-starts-fell-again-june&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? 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