US housing starts in May down by 0.9% to 1.269 million units
May US homebuilding declined, but building permits rose in a mixed housing starts report.
May US housing starts declined by 0.9% to a seasonally adjusted annual rate of 1.269 million units, according to the US Census Bureau and the US Department of Housing and Urban Development. That statistic is a drop from April’s 5.7% increase with a revised rate of 1.281 million units.
May US housing starts details
|Single-family housing starts||-6.4%|
|Multi-family housing starts||+13.8%|
May US housing starts details
Single-family housing starts plummeted by 6.4% to 820,000 units in May. The decrease in single-family housing starts was possibly caused by heavy rains that delayed construction. Single-family homebuilding fell the most in northeastern, midwestern, and western states. Only southern states experienced home construction growth.
While single-family housing starts dropped, there was positive news for multi-family homes. Multi-family housing starts increased by 13.8% in May to a rate of 436,000 units as rental demand is high.
Building permits also increased for the second straight month by 0.3% to a rate of 1.294 million units in a potentially positive sign for future home construction.
What do economists say about May US housing starts?
Ian Shepherdson, chief economist for Pantheon Macroeconomics, believes that housing data will improve later this year.
‘Single-family permits usually track new home sales but are lagging behind, either because homebuilders doubt the recent revival in sales will last - we [Pantheon Macroeconomics] think it will - and/or because they have too much inventory still after the disastrous drop in sales in Q4 last year. If we’re right, and new home sales rise in the second half of the year, new construction will follow,’ said Shepherdson.
Robert Frick, US Navy Credit Union economist, has a more pessimistic view of the May housing starts report because of a rising demand for housing and stringent building codes.
‘Given restrictive local building codes and expensive labour and materials, home builders are hard-pressed to meet the growing demand for new homes,’ said Frick.
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