NAHB Chief Economist Robert Dietz recently provided this housing industry overview in the bi-weekly newsletter Eye on the Economy:

Job growth and lower mortgage rates are the positive economic variables that will support near-term growth for single-family construction. In June, 224,000 jobs were added to the nation’s workforce, as the unemployment rate held at just 3.7%.

However, the low unemployment is further aggravating the scarcity of skilled laborers. In May, there were 369,000 unfilled jobs in the construction sector.

Likewise, lower mortgage interest rates — averaging near 3.8% for a 30-year fixed-rate, according to Freddie Mac — are helping to promote housing demand, although on a limited basis.

For example, pending sales of existing homes increased 1.1% in May. However, those sales were still down on a year-over-year basis — the 17th straight month of such declines, largely due to ongoing housing affordability constraints.

Nonetheless, builder confidence remains positive, increasing one point in July to a level of 65. The NAHB/Wells Fargo Housing Market Index has been in the low- to mid-60s for six months. This month’s uptick was matched by a 3.5% gain for single-family starts in June, rising to an annual rate of 847,000.

Still, single-family construction in 2019 is down approximately 5% compared to the first half of 2018. Thus far, the South is the only region reporting a net gain in 2019.

Single-family permitting is lagging as well. However, the number of homes authorized but not yet under construction has declined to 85,000 after reaching a peak of 103,000 in December.

Multifamily construction also declined in June by about 10%, following a particularly strong month of May. Multifamily development has been roughly flat thus far in 2019, with 5-plus unit production up just 0.2% for the first half of the year.