Uh-Oh, New Home Construction Is Flatlining
Nationwide housing starts – including single-family and multifamily production – mostly held flat at a seasonally adjusted annual rate of 1.16 million in May. Permit issuance – a gauge of future construction – also held mostly flat at an annual rate of 1.14 million.
Still, some inventory relief may be on the relief in some markets at least compared to a year ago: Single-family housing starts are up about 10 percent from last May, according to the latest data from the U.S. Department of Housing and Urban Development and the Commerce Development.
"Despite May's relatively flat report, our builders are telling us that the market is improving and consumers are more ready and willing to make a home purchase," says Ed Brady, chairman of the National Association of Home Builders.
Single-family and multifamily starts rose the most in the West last month, up 14.4 percent month-over-month. The South saw a 1.5 percent increase while the Northeast plunged 33.3 percent in May. The Midwest posted a 2.5 percent decrease. However, when excluding multifamily starts, single-family production rose in three out of the four regions in May – the Northeast, South, and West.
"Builder confidence rose this month and single-family housing starts are up roughly 10 percent from a year ago -- two indicators that we can expect further growth in housing production this year," says NAHB Chief Economist Robert Dietz. "However, builders continue to face supply-side constraints, such as shortages of buildable lots and labor."
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