Housing Starts Jump in May Amid Flagging Builder Confidence
The Commerce Department reported housing starts rose to a seasonally adjusted annual rate of 1.35 million, the strongest pace since July 2007. Yet a second straight monthly drop in permits foreshadows housing market activity could remain moderate.
Privately-owned housing completions in May were at a seasonally adjusted annual rate of 1.29 million, a 1.9% increase above the revised April estimate of 1.27 million.
WASHINGTON — Housing starts in the United States climbed to a near 11-year high in May as single-family and multifamily home construction accelerated amid a drop in permits, which are a sign of future housing production activity.
Housing starts in May were at a seasonally adjusted annual rate of 1.35 million, the Commerce Department announced this week, exceeding the forecast among economists surveyed by MarketWatch for a 1.3 million pace.
This marked the fastest annual pace for home builders breaking ground on new construction since July 2007. The pace was 5% higher than April and 20.3% higher than a year ago.
Privately-owned housing completions in May were at a seasonally adjusted annual rate of 1.29 million, a 1.9% increase above the revised April estimate of 1.27 million and more than 10% above the May 2017 rate of 1.17 million. Single-family housing completions in May registered at 890,000 for an 11% increase above the revised April rate of 802,000.
Regionally, the Midwest led the nation with a 62.2% increase in combined single- and multifamily housing starts. Starts fell 0.9% in the South, 4.1% in the West and 15% in the Northeast.
While overall housing production numbers increased, overall permits fell 4.6% to 1.3 million units in May. Single-family permits fell 2.2% to 844,000 while multifamily permits fell 8.7% to 457,000.
According to the National Association of Home Builders (NAHB), builder sentiment fell 2 points to 68 in June. The NAHB/Wells Fargo Housing Market Index stood at 66 last June. A reading above 50 is considered positive sentiment.
Builder sentiment has been mostly in the 70s since December, except for one dip in April, when mortgage rates took a sizable jump. The dip in builder sentiment is centered on a spike in material prices, according to NAHB, with builders increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. As an example, record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.
“Ongoing job creation, positive demographics and tight existing home inventory should spur more single-family production in the months ahead,” NAHB Chief Economist Robert Dietz states in an announcement. “However, the softening of single-family permits is consistent with our reports showing that builders are concerned over mounting construction costs, including the highly elevated prices of softwood lumber.”
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About the Author
Rodney Bosch, Senior Editor
Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.
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