May Housing Starts Dip Slightly

June 20, 2016

Housing starts fell in May, HUD and the Census Bureau reported Friday, but apparently not as much as anticipated.

The report on Friday said housing starts fell by 0.3 percent to 1.164 million, seasonally adjusted, from May’s revised 1.167 million, but 9.5 percent higher than a year ago (1.063 million). Single-family housing starts in May rose by 0.3 percent to 764,000; the rate for units in buildings with five units or more rose to 396,000, a 1.3 percent improvement from April.

Regionally, starts proved mixed. In the largest region, the South, starts rose by 1.5 percent to 613,000 units, seasonally adjusted, from 604,000 units in April and improved by nearly 21 percent from a year ago. In the West, starts jumped by 14.4 percent to 270,000 units in May from 236,000 in April and improved by 1.1 percent from a year ago.

In the Northeast, however, starts fell by more than 33 percent to 82,000 units from 123,000 in April and fell by nearly 43 percent from a year ago. In the Midwest, starts fell by 2.5 percent to 199,000 units from 204,000 units in April but improved by 37.2 percent from a year ago.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the report came in better than consensus estimates of -1.9 percent. “Housing starts tend to be volatile on a monthly basis,” he said.

The report said privately owned housing units authorized by building permits in May rose to 1.138 million, 0.7 percent higher than April (1.130 million) but 10.1 percent below a year ago. Single-family authorizations in May fell by 2.0 percent to 726,000; authorizations of units in buildings with five units or more rose by 6.7 percent to 381,000 in May but fell by nearly 30 percent from a year ago.

HUD/Census said privately owned housing completions in May rose to 988,000, 5.1 percent higher than April (940,000) but 3.5 percent lower than a year ago. Single-family housing completions in May rose by 2.3 percent to 717,000; the April rate for units in buildings with five units or more rose by more than 14 percent to 263,000 but was off by nearly 30 percent from a year ago.

Vitner noted despite the monthly setback in housing starts, the National Association of Home Builders/Wells Fargo Housing Market Index rose 2 points in June to 60, up from a four-month flat trend. “This indicates that the housing sector is still showing some upward momentum,” he said.