June housing starts bounce; permit issuance tanks

We just got our latest look at home construction activity in June. Here's what the numbers showed:

* Starts rose 2.3% to a seasonally adjusted annual rate of 1.467 million in June from a downwardly revised 1.434 million in May. That still left starts down slightly more than 19% from a year ago.

* By category, single family starts were off slightly (-0.2%), while multifamily starts were up a rather sharp 12.5%. Regionally, starts fell 2.4% in the Northeast and 3.7% in the Midwest. They rose 2.4% in the South and 9% in the West.

* Building permits really fell off a cliff, however (shown in the chart above). They dropped 7.5% to 1.406 million from 1.52 million in May. That leaves permits down about 25% YOY, and at their lowest level since June 1997 (1.402 million).

While housing starts rose slightly last month, building permits fell sharply. That's the most important bit of data we got today because it points to a lower level of future construction activity. And no wonder: We have the largest glut of new and existing homes on the market ever. If we're going to work those inventories down, we're going to have to see less new home construction and more realistic pricing in the existing home market.