Conditions for the U.S. housing market, a key source of freight for many trucking sectors, look better than they have in years, according to two reports released late last week.
New home starts in June jumped 9.8% from the previous month, hitting an adjusted annual rate of 1.174 million, while May’s figure was revised slightly higher, according to the U.S. Commerce Department.
The June performance was better than a consensus estimate from poll of economists surveyed by Bloomberg.
While single-family home starts fell 0.9% in June, the largest share of the market, the more volatile multifamily sector, surged 29.4%. Starts for buildings with five or more units hit their highest level since November 1987.
“The multifamily gains this month are encouraging and show that the Millennial generation continues to be drawn to the rental market,” said National Association of Homebuilders Chairman Tom Woods.
Regionally in June, combined single- and multifamily starts rose by 35.5% in the Northeast and 13.5% in the South. The Midwest and West posted respective losses of 0.7% and 6%.
An indicator of future building activity, the number of new building permits issued, increased 7.4% overall in June from May, hitting its highest pace in nearly eight years. It was 30% higher than June 2014.
Single-family home building permits increased 0.9%, while multifamily home permits soared 15.3%. Permits for buildings with five or more units were the best since January 1990.
All four regions posted permit gains in June. The Northeast, Midwest, South and West posted respective permit gains of 2.8%, 2.9%, 10.4% and 9.5%, respectively.
Housing construction has nearly returned to pre-recessionary levels, as builders ramped up activity on multi-family projects including condos and co-ops, according to Lindsey Piegza, chief economist for Stifel Fixed Income.
The report follows a separate one issued on Thursday showing builder confidence in the market for newly built, single-family homes in July hit its highest level since November 2005, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The reading of 60 for this month is the same as the June reading, which was revised upward one point to 60 as well.
“This month’s reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth,” said NAHB Chief Economist David Crowe. “However, builders still face a number of challenges, including shortages of lots and labor.”
Two of the three HMI components posted gains in July. The component gauging current sales conditions rose one point to 66 and the index charting sales expectations in the next six months increased two points to 71. Meanwhile, the component measuring buyer traffic dropped a single point to 43.
"The housing market continues to take steps in the right direction. However, growth remains far from robust; as we have seen in the recent decline in retail sales, consumers continue to struggle to afford purchases, particularly large ticket items, amid stagnant income growth,” said Piegza.