New home construction ticked up in June after hitting a five-year low in May — the lowest level since the thick of the coronavirus pandemic.
Private home building came in at a seasonally adjusted annual rate of 1.32 million new houses in June, the Commerce Department reported Friday.
The number was up about 4.6 percent from May but still half a percent lower than June of last year.
After rising during the economic rebound from the pandemic, housing construction has languished since 2022.
Housing completions fell off a cliff in June, dropping by almost 15 percent on a seasonally adjusted basis from May. That’s the lowest rate since January 2022.
Permits to build new houses stayed flat from May to June at a rate of about 1.4 million.
The U.S. is experiencing a massive housing shortage, which is at the root of the country’s housing affordability crisis, according to the Joint Center for Housing Studies at Harvard University.
Public mortgage backer Freddie Mac put the shortage at 3.7 million units in the third quarter of last year, though estimates have a significant range. The National Association of Realtors put the shortfall at 5.5 million units in 2021. The National Association of Home Builders put it at 1.5 million units in the same year.
Elevated interest rates have weighed on the housing sector in the short-term, but with the huge lack of low-cost housing across the country, it’s not exactly clear why this isn’t translating to high economic demand.
In a plan to address the shortage, the National Association of Homebuilders pointed to a variety of factors — notably regional zoning laws that prohibit density of construction.
“Localities need to rework their zoning plans to increase density and allow more flexibility for developers,” the group said in its plan.
In March, the heads of the departments of the Interior and Housing and Urban Development announced a plan to open up federal land to build affordable housing.
Jon Raby, acting head of the Bureau of Land Management, told Bloomberg News in March that the agency is considering selling about 625 square miles of federal lands “around cities large and small.”
One of President Trump’s campaign proposals touted suburban areas of the U.S. as localities in which to foster the “American dream.”
Conservation-focused group the Center for Western Priorities described the proposal as a “sprawl plan.”
“Get ready for a housing development to pave over your favorite hiking trail,” the group’s deputy director Aaron Weiss said in a statement.
The Associated Press obtained documents in March showing that the Trump administration has “stalled at least $60 million in funding intended largely for affordable housing developments nationwide.”
Republicans’ recent large-scale tax-and-spending cut bill made a 12-percent increase in certain allocations of low-income housing tax credits starting in 2026, while reducing private bonds requirements.
The National League of Cities organization said the changes could help “finance the production or preservation of approximately one million additional affordable rental homes over 10 years.”
The bill also expanded the investment-incentive program for so-called opportunity zones, with a special focus on rural areas, which analysts say didn’t get enough attention in the program’s first iteration.
“Investment often flowed into neighborhoods that were already receiving significant investments, leaving many of the most distressed communities behind,” attorneys for law firm Pillsbury wrote in an analysis of the legislation.
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