Housing Starts, Permits Drop in May
Housing starts in May fell 5.5% from April to a seasonally adjusted annual rate of 1,092,000, 2.4% behind the pace of May, 2016, the Commerce Department reported Friday. Building permits also fell in May, dropping 4.9% from April to a rate of 1,168,000, 0.8% below the May 2016 rate.
Single-family housing starts in May were at a rate of 794,000, 3.9% below April but 8.5% above the rate of May, 2016. The May rate for units in buildings with five units or more was 284,000, down 9.8% from April and down 25.7% from a year earlier. Single-family permits fell 1.9% to a rate of 779,000 but remained 6% ahead of the May 2016 pace.
The declines were not reflected in all regions.
Overall starts were flat with April in the Northeast but up 12.5% year-over-year. In the Midwest, overall starts were down 9.2% sequentially and 11.6% year-over-year, but single-family starts were up 9.5% and 29% respectively. In the South, starts overall were down 8.8% from April and 9.9% from last May; single-family starts were down 8.9% and 0.5% respectively. In the West, overall starts rose 1.3% sequentially and 17.4% year-over-year; single-family starts were down 4.9% from April but up 22.2% from May last year.
Permits also were mixed regionally, with a 3.3% sequential increase and a 20.4% year-over-year gain in the Northeast in overall permits and gains of 1.9% and 3.8% in single-family, respectively. Permits overall in the South were off 0.3% from April but still 1.9% ahead of a year earlier; single-family permits were up 2.4% and 8% respectively. The West saw overall drops of 13.1% from April and 11.7% from last May, with single-family dropping 5.2% sequentially but remaining 6.4% ahead of May, 2016.
Lawrence Yun, chief economist for the National Association of Realtors, was dismayed by the report. He issued the following comment: “Housing shortages look to intensify and may well turn into a housing emergency if the discrepancy between housing demand and housing supply widens further. The falling housing starts and housing permits in May are befuddling given the lack of homes for sale and the quick pace of selling a newly-constructed homes. Meanwhile, job creations of a consistent 2 million a year will push up housing demand further. One thing that moving up is the housing costs for consumers: higher home prices and higher rents.”