US housing starts surge more than expected in June

According to media reports, US housing starts surged more than expected in June on the back of rising construction activity.The data from the US Commerce Department showed that housing starts climbed 4.8% to a seasonally adjusted annual pace of 1.19 million units in the second quarter, beating economists’ estimates, which called for a pace of 1.17 million units. The increase in construction activity came on top of other positive economic news for the quarter regarding employment, industrial production and retail sales.

Construction of single family houses increased 4.4% to 778,000 units and housing starts for multi-family units surged 5.4% to 411,000 in June. However, building permits, an indicator of future construction, registered just 1% growth to an annualized pace of 738,000 units for single family houses last month while permits for multi-family units rose 2.5% to 415,000.

Economists commented that demand was mostly fulfilled and therefore they forecast limited further increases as apartment rents have started to be more modest in some cities and vacancy rates are increasing.