New Residential Construction in June 2006–Going Down!

New Residential Construction in June 2006–Going Down!

July 19, 2006

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new
residential construction statistics for June 2006
:

BUILDING PERMITS
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,862,000.
This is 4.3 percent (±1.0%) below the revised May rate of 1,946,000 and is 14.9 percent (±1.0%) below the June 2005
estimate of 2,188,000.
Single-family authorizations in June were at a rate of 1,395,000; this is 6.3 percent (±1.0%) below the May figure of
1,488,000. Authorizations of units in buildings with five units or more were at a rate of 397,000 in June.

HOUSING STARTS
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,850,000. This is 5.3 percent (±6.6%)*
below the revised May estimate
of 1,953,000 and is 11.0 percent (±5.6%) below the June 2005 rate of 2,078,000.
Single-family housing starts in June were at a rate of 1,486,000; this is 6.5 percent (±7.2%)* below the May figure of
1,590,000. The June rate for units in buildings with five units or more was 306,000.

HOUSING COMPLETIONS
Privately-owned housing completions in June were at a seasonally adjusted annual rate of 2,017,000. This is 6.4 percent
(±9.4%)* above the revised May estimate
of 1,896,000 and is 2.0 percent (±8.4%)* above the June 2005 rate of 1,977,000.
Single-family housing completions in June were at a rate of 1,738,000; this is 7.5 percent below the May figure of 1,616,000. The June rate for units in buildings with five units or more was 255,000.

The increase in mortgage rates is taking a bite out of both housing activity and home prices. Bsed on our estimates, the duration of the stream of services delivered by the US housing stock is more than 25 years. This means a one percentage point increase in mortage rates lowers the intrinsic value of hte housing stock by about 25%. Ouch!

JR

Pamela Rutledge

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