WASHINGTON — U.S. homebuilders sharply curtailed the pace of construction in June as housing starts plummeted 12.3 per cent.
The Commerce Department said recently housing starts fell to a seasonally adjusted annual rate of 1.17 million from 1.34 million in May. June’s pace of construction was the lowest since September 2017.
Housing starts plunged 35.8 per cent in the Midwest and declined less severely in the Northeast, South and West.
Permits, an indicator of upcoming construction, also declined 2.2 per cent in June from the previous month.
Still, the drop-off in housing starts might only reflect the volatile nature of the government’s monthly construction report, rather than the beginning of a downward trend.
For the first half of 2018, a steady job market and a shortage of existing homes for sale has bolstered housing starts. New home construction has climbed 7.8 per cent year-to-date.
Homebuilders are also relatively confident that the expansion will continue. The National Association of Home Builders/Wells Fargo builder sentiment index declined slightly to a reading of 68 in June. Any reading above 50 signals growth.
But builders also see reasons for concern. They face cost pressures from a lack of available land and construction workers, as well as from higher commodity prices from the tariffs announced by President Donald Trump.