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June housing starts were released today, essentially in line with consensus at 1,253,000 and last month’s revised 1,265,000, but 6.2% above a comparatively weak result in June of 2018. Permits were a bit disappointing, dropping 6.1% month over month and 6.6% year over year to 1,220,000 units. This is the lowest level for permits since May 2017.
The housing market continues to face a seemingly offsetting set of headwinds and tailwinds. While the inventory of for-sale inventory appears to be shrinking again (driving prospective buyers towards new homes) and mortgage rates continue to be favorable, the availability and cost of land, labor and materials continues to challenge builders to produce more homes at an affordable price point. The May 2019 median price for new homes at $308,000, and existing homes at $277,000, reflect the affordability challenges present in the industry, particularly at the sub-$250,000 level that is most appealing for the first-time home buyer. With these market conditions expected to continue in the short-term I would expect starts and permits to continue in a relatively narrow range as well.
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