According to HousingWire's report on recent Census data, we're seeing an interesting split in the housing construction picture right now. Housing starts came in ahead of what experts expected in June, jumping nearly nineteen percent from the previous month. However, this gain was almost entirely driven by a big spike in multifamily construction, while single-family starts actually dipped slightly. The volatility in multifamily numbers means this data can swing dramatically month to month, so it's worth looking at the bigger picture rather than getting too excited about one strong month.
The real story here is in the permits data, which tells us what builders actually plan to build going forward. Housing permits came in near cycle lows, continuing a trend that's been troubling for a while now. Single-family permits have been falling consistently, and since single-family construction makes up the bulk of the market, that's what's dragging down the overall numbers. Even though permits declined from May to June, we're essentially moving sideways without much real growth.
What's driving this caution from builders is straightforward economics. Builders are sitting with plenty of completed homes ready to sell, which makes them more willing to issue permits. But they're also watching weak new home sales and limited buyer enthusiasm. The reporting notes that new home sales haven't grown meaningfully in years when you set aside the unusual COVID spike, and they're still relying on below-market mortgage rates to move inventory. Without confidence that demand will actually be there to absorb new construction, builders simply aren't motivated to ramp up production.
What I am seeing locally here in the Bay Area and East Bay is a similar hesitation among developers and builders. Everyone's focused on the fundamentals, and right now those fundamentals show that demand isn't there to justify aggressive new construction. Until we see actual buyer appetite improve or mortgage rates make homeownership more accessible without subsidies, expect builders to stay cautious about pulling permits, regardless of what policies might theoretically open doors for more housing.
