Friday’s report found that privately-owned housing starts in May came in at a seasonally adjusted annual rate of 1.164 million. This is 0.3 percent lower than April, though still 9.5 percent up from last May. At the same time, single-family housing starts in May were at a rate of 764,000, which is 0.3 percent higher than in April.
Housing completions in May were equally up and down. Privately-owned housing completions were at a seasonally adjusted annual rate of 988,000, which while 5.1 percent above revised April estimates of 940,000, is 3.5 percent lower than in May 2015. Single-family housing completions in May were at a rate of 717,000, which is 2.3 percent above the revised April rate of 701,000, according to the report.
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,138,000. This is 0.7 percent above the revised April rate of 1,130,000, but is 10.1 percent below the May 2015 estimate of 1,266,000.
Building permits, however, were just simply down. Single-family authorizations in May were at a rate of 726,000, which is 2 percent below revised April figures, the report stated.
“This is an important signal that builders are slowing expansion.”
Jonathan Smoke, Chief Economist, Realtor.com
Looking at the bigger picture, industry analysts see an equally mixed blend of sunlight and shade in the Census data. “Despite monthly volatility, the 12-month rolling total inches upwards to the 50-year average,” said Ralph B McLaughlin, chief economist at Trulia. “Housing starts continue to be a bright spot in an otherwise supply -constrained market.”
McLaughlin said the potential for growth in housing starts remains solid as starts hover around 80 percent of the 50-year average, and that even if single family starts are slow, builders are “ gaining ground on what has been a strong four years for multifamily construction.”
Robert Dietz, chief economist and senior vice president for economics and housing policy for the National Association of Home Builders, said that an elevated construction pace in February makes the numbers of the past three months a little less than straightforward.
But Jonathan Smoke, chief economist, at the National Association of Realtors, found at least one thing to keep an eye on.
“The most troubling sign in this year’s new construction data is the continued trend of four straight months of starts exceeding permits,” Smoke said. “This is an important signal that builders are slowing expansion.”
With starts exceeding permits and permits on decline on a year-over-year basis, he said, fewer starts and completions could be the reality six months down the road.
“The bottom line is that we are not seeing enough new construction to keep pace with household formation, let alone address the fact that we have a shortage in both available rental units and for sale inventory,” Smoke said.