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The New Residential Construction report for June isn't all bad news, just mostly bad news. Permits lead the downside.

Building Permits

Privately‐owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,220,000. This is 6.1 percent below the revised May rate of 1,299,000 and is 6.6 percent below the June 2018 rate of 1,306,000. Single‐family authorizations in June were at a rate of 813,000; this is 0.4 percent above the revised May figure of 810,000. Authorizations of units in buildings with five units or more were at a rate of 360,000 in June.

Housing Starts

Privately‐owned housing starts in June were at a seasonally adjusted annual rate of 1,253,000. This is 0.9 percent below the revised May estimate of 1,265,000, but is 6.2 percent above the June 2018 rate of 1,180,000. Single‐family housing starts in June were at a rate of 847,000; this is 3.5 percent above the revised May figure of 818,000. The June rate for units in buildings with five units or more was 396,000.

Housing Completions

Privately‐owned housing completions in June were at a seasonally adjusted annual rate of 1,161,000. This is 4.8 percent below the revised May estimate of 1,220,000 and is 3.7 percent below the June 2018 rate of 1,205,000. Single‐family housing completions in June were at a rate of 870,000; this is 1.8 percent below the revised May rate of 886,000. The June rate for units in buildings with five units or more was 283,000.

Bond Yields

Bond yield declined across the board on the news.

  • The 10-year yield fell 4.7 basis points to 2.073%.
  • The 30-Year yield fell 4.3 basis points to 2.589%
  • The 5-year yield fell 4.4 basis points to 1.840%
  • The 3-month yield fell 2.5 basis points to 2.134%

Not All Bad

The housing report wasn't entirely awful.

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Single-family permits rose a fraction. Single-family starts rose 3.5% but from negative revisions.

Details, however, are not very encouraging.

Single Family Starts and Permits

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Single-family starts are down 4.7% compared to a year ago.

Historically, single-family starts and permits are dismal.

Housing Slowly Rolling Over

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The housing sector is slowly rolling over.

Despite lower interest rates, homes are not affordable and attitudes towards the ownership society have changed.

Mike "Mish" Shedlock