US Housing Starts Surge 19% in June, Blowing Past Forecasts
June housing starts hit 1.427 million annualized, crushing the 1.310 million estimate with a 19% monthly jump.
U.S. housing starts roared back in June, reaching a 1.427 million annualized rate and obliterating Wall Street's 1.310 million forecast, the Census Bureau reported Thursday. The 19% monthly surge reversed May's steep 15.2% decline — a month that was itself revised upward to 1.199 million from an initial 1.177 million reading, signaling the construction sector had more momentum than previously thought.
Building permits, a forward-looking gauge of future construction activity, told a more cautious story. June permits came in at 1.367 million, falling short of the 1.400 million estimate and declining 3.0% from the prior month. That divergence between surging starts and softening permits suggests the near-term pipeline may not sustain the headline momentum.
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Housing completions also strengthened in June, climbing to 1.392 million annualized — up 3.3% from May's revised pace. Single-family completions led the way, jumping 6.6% to 964,000 annualized units, while buildings with five or more units posted 413,000 completions. Year-over-year, total completions edged 1.5% higher compared with June 2024's 1.372 million pace.
Despite the strong headline number, structural forces continue to strangle overall housing supply. Millions of homeowners who locked in mortgage rates near 2% during the pandemic have little incentive to sell and forfeit those historically cheap financing terms. Compounding that lock-in effect, many baby boomers are sitting on massive unrealized capital gains — in some cases approaching $1 million in appreciation on homes purchased decades ago. Selling could trigger significant capital gains taxes and potentially inflate Medicare IRMAA premiums by boosting modified adjusted gross income. Heirs, by contrast, typically receive a stepped-up cost basis upon inheritance, allowing them to sidestep those tax consequences entirely.
The Federal Reserve is watching these crosscurrents closely. Elevated affordability challenges and persistently tight inventory keep housing a central tension in the central bank's inflation calculus, even as today's starts number offered a rare burst of upside. Continue reading at Forexlive.
