Home Starts Decline in May as Construction Levels Drop 10 Percent
New housing starts ended a four-month-run of increases in May, dropping 10% month-over-month, according to a joint release by the Commerce Department's Census Bureau and the Department of Housing and Urban Development (HUD). Privately owned housing starts in May were at a seasonally adjusted annual rate of 593,000, according to the monthly report (download here). That's down 10% from the revised April rate of 659,000. The April estimate of the annual rate was revised down from the original rate of 672,000. However, May 2010's rate was up 7.8% from the May 2009 rate of 550,000. As HousingWire previously reported, while starts were up during the past four months, in April, a decline in new building permits indicated a future decline in new construction. Single-family housing starts were at a seasonally adjusted annual rate of 468,000, down 17.2% from the revised April rate of 565,000. The May rate for housing starts of buildings with five or more units was 112,000, up from the April revised rate of 81,000. It's sobering news for the new housing markets, analysts said, and comes as the deadline for the homebuyer tax credit has come and gone. While mortgage rates are still near historic lows, the market is no longer supported by the Federal Reserve's mortgage-backed securities (MBS) purchase program, which ended earlier this year. "Today's data releases illustrate how uneven the economic recovery still is, with the manufacturing sector firing on all cylinders while the housing sector slides back into the abyss," Toronto-based Capital Economics wrote in commentary released Wednesday. The seasonally adjusted annual rate for privately owned housing units authorized by building permits in May was 574,000, down 5.9% from the upwardly revised April rate of 610,000, but it 4.4% above the May 2009 rate of 550,000. Permits for single-family homes in May were at a rate of 438,000, down 9.9% from the upwardly revised April rate of 486,000. Permits issued for buildings with five or more units were at a rate of 117,000 in May, up from the upwardly revised April rate of 107,000. On Tuesday, the National Association of Homebuilders said builder confidence decreased in June, after reaching a three-year high in May. The rate of new housing units completed in May was at a seasonally adjusted annual rate of 687,000, down 7.4% from the downwardly revised April estimate of 742,000 and is 15.4% below the May 2009 rate of 812,000. Single-family housing completions were at a rate of 507,000 in May down 7.8% from the downwardly revised April rate of 550,000. The May rate for buildings with five or more units was 175,000, down from the April downwardly revised rate of 181,000. Write to Austin Kilgore.