June Housing Starts: Multifamily Surges as Single-Family Falls; Home Depot, Lowe's Watch

What June's Housing Starts Data Changed

The latest US housing starts report for June showed a split picture: overall housing starts rose on a rebound in multifamily construction, even as single-family housing starts fell and building permits dropped to their lowest level in ten months. Multifamily building, which covers apartment complexes and other multi-unit projects, jumped enough to offset weakness in the single-family segment, which is more sensitive to mortgage rates and buyer affordability.

Why Home Depot and Lowe's Stock Are in Focus

Housing starts are one of the more direct gauges of demand for the building materials, tools and home-improvement products sold by Home Depot and Lowe's. Single-family construction in particular tends to translate into more project-based spending at these retailers, from lumber and fixtures to appliances, than multifamily building does, since apartment developers often buy directly from suppliers and contractors rather than big-box retail. A report showing single-family starts and permits weakening, even while multifamily strengthens, is a mixed signal: it does not point to an outright pullback in construction activity, but it does not confirm the kind of single-family demand pickup that most directly feeds Home Depot and Lowe's core customer base of homeowners and contractors.

Which Stocks, and Why

Home Depot and Lowe's are the clearest read-throughs among listed names, through the mortgage-and-housing channel that links construction activity to home-improvement demand. Neither company is named directly in this report, so the link runs through housing-market conditions generally rather than through any specific news about either retailer. Because permits, which signal future building activity, fell to a ten-month low, the report leans slightly cautious for the segment of demand tied to new single-family construction, even as the multifamily rebound suggests overall building activity is not collapsing.

What to Watch

The key follow-through data points are mortgage rates and existing-home sales, which shape whether single-family construction stabilizes or keeps softening, along with next month's permits data, which will show whether the ten-month-low reading was a one-off or the start of a trend. Home Depot and Lowe's earnings commentary on pro-customer and building-materials demand will also help clarify how much of this housing data is actually showing up in their sales.