US housing starts pulled back in June, paring the prior month's spike, as scarcity of housing supply and a resilient economy suggest home construction is beginning to recover, even as some construction supplies such as flux are lagging.
Privately-owned housing starts fell by 8pc to a seasonally adjusted annual rate of 1.434mn units in June, according to the latest data from the US Census Bureau and the Department for Housing and Urban Development (HUD). That follows a downwardly revised surge of 15.7pc in May after an original 21.7pc upward print. The latest reading is below May's revised rate of 1.559mn and 8.1pc below June 2022.
Roofing flux prices in the US Gulf coast held steady at $490/st in June from May and were about 40pc below year-earlier levels.
Roofing flux prices in the Midwest also remained unchanged at $465/st in June from May as rising seasonal demand met elevated inventory positions.
Home construction appears to be in the beginnings of a recovery as scant housing supply and builder incentives prompt buyers to turn to new housing over existing homes. Housing went into recession in 2022 as mortgage rates more than doubled to above 7pc in the wake of the most aggressive course of Federal Reserve rates hikes since the 1980s. The Fed appears to be nearing the end of its hiking campaign and money markets expect rates to begin coming down next year.
Flux outlook more bullish
The flux price outlook has shifted towards more bullish sentiment as stocks decline and increased storm activity supports demand. In June, there were 5,628 severe weather reports in the US involving tornadoes, hail or wind. This is more than double the amount of similar reports seen in May and about 20pc above year ago levels, according to the National Oceanic and Atmospheric Administration's Storm Prediction Center.
Single-family starts were at a rate of 935,000 in June, 7pc below the May figure of 1,005,000 and 7.4pc below June 2022. Starts for multi-family units of five units or more were at a rate of 482,000 in June, 11.6pc below May's revised rate of 545,000 and 11.2pc below June 2022, as rent gains for apartments are slowing and even reversing.
Housing permits also experienced declines, with June's rate of 1.43mn privately-owned permits representing a 3.7pc decline against May's rate of 1.496mn and a 15.3pc decline from June 2022.
Single-family permits were at a rate of 922,000 in June, 2.2pc above May's rate of 902,000 but 2.7pc below June 2022. Permits for multifamily units of five units or more were at a rate of 467,000 in June, 13.5pc below May and 33pc below June 2022.
Building confidence is recovering, rising to 55 in June and again to 56 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Anything above 50 denotes positive sentiment, and builder confidence has been rising for seven straight months now to the highest point in nearly a year.
