It’s now the third month straight that U.S. homebuilding has fell—considering the U.S. is currently in a housing shortage, this isn’t good news. According to the latest report from the U.S. Census Bureau, this is the lowest level housing starts have been at in eight months.
Building permits dropped an additional 4.9 percent from the revised April rate of 1,228,000, which is 0.8 percent lower than last May’s rate of 1,178,000. Single-family authorizations were at a rate of 779,000 in May, 1.9 percent down from April’s 794,000.
MarketWatch said in a recent report that homebuilders are working at a slower pace than last year and have especially pulled back on apartment buildings and other large multidwelling units, which were at a rate of 358,000 in May.
“Part of the recent slowdown might reflect a bit of a pause after an unusually warm winter during which builders were much busier than usual,” said MarketWatch. “Some economists contend a higher level of construction that occurred earlier in the year would have normally taken place in the spring.”
Housing starts for privately-owned housing were at 1,092,000 in May, which is 5.5 percent lower than revised April estimate of 1,156,000—2.4 percent lower than May 2016’s rate of 1,119,000. Single-family housing starts were 3.9 percent below revised April figure of 826,000 at 794,000. As for apartments—284,000.
“In May, the biggest drop-off occurred in the South and Midwest. Construction rose slightly in the West and was flat in the Northeast,” MarketWatch said.
Privately-owned housing completions were at a seasonally adjusted rate of 1,164,000 in May, which is 5.6 percent above April estimates of 1,102,000 and is 14.6 percent above May 2016’s rate of 1,016,000. Single-family housing completions in May were 4.9 percent above the revised April rate of 779,000 at 817,000. May’s rate for units in buildings with five or more units was 335,000.
“For years the housing market has experienced a mini-renaissance of sorts as a steadily growing economy, rising employment and ultra-low interest rates enabled home people to buy homes,” MarketWatch said. “The outlook might not be as favorable now, though. Aside from widespread labor shortages, prices for wood and other raw materials have also risen. And the Federal Reserve has embarked on a series of increases in a key U.S. interest rate that helps determine the cost of borrowing, a potential brake on future sales.”