May Housing Starts Slip 0.3%

Single-family housing starts are up 14.5% in the first five months of 2016, compared with the same period a year ago. May’s decline followed a 4.9% surge in April.

Building permits climbed 0.7 percent in May to a 1.14 million annualized rate. So far in the second quarter, starts are averaging a 1.17 million pace, up from the second quarter, which was an increase from the final three months of 2015.

Single-family housing starts in May were at a rate of 764,000; this is 0.3 percent above the revised April figure of 762,000. They were projected to rise to 1.15 million.

Two of four regions showed a decrease in starts in May, paced by a 33.3 percent drop in the Northeast, according to the report.

On a year-to-year basis, total housing starts were up 9.5 percent in May on a seasonally adjusted basis. The number of single-family homes under construction was the highest since October 2008 and the number of buildings with five or more units was the highest since October 1974. The multi-family segment of the market continues to be supported by strong demand for rental accommodation as some Americans remain wary of homeownership in the aftermath of the housing market collapse.

New-home construction was little changed in May, a sign the residential real-estate industry will add little to economic growth in the second quarter.

The government reported on Thursday that rents in May posted their biggest gain since February 2007.

New building permits rose during the month, rising 0.7 percent above April’s rate to 1.138 million.

Regionally, permits issued for one-unit structures picked up 0.8% in the South, the only place with month-over-month growth. “We look for continued improvement related to single-family units over time but some cooling in the multifamily data”, said Daniel Silver, an economist at JPMorgan in NY.