Housing Starts Rise Despite Weak Builder Outlook
Construction starts on US housing units jumped 17.2% in May, rising to a seasonally adjusted annual rate of 532,000 units, according to estimates released today by the US Commerce Department. The good month for housing starts comes after the volume dived 12.9% the month before. A 62% increase in new multifamily construction drove the month-over-month gain, while single-family home starts rose 7.5% to an annual rate of 401,000 units. Single-family building permits -- an indicator of future starts -- rose 7.9% in the month to an annual rate of 408,000 permits. Economists previously surveyed by MarketWatch had expected an increase in starts to 485,000. Despite the month-on-month recovery of housing starts, overall home builder confidence was down during the month, according to the National Association of Home Builders/Wells Fargo Housing Market Index, released Monday. The home builder outlook on the market slipped a single point to 15 in June, where an index of more than 50 would indicate most builders see conditions as good rather than poor. The indices on current home sales and the traffic of prospective buyers held from the previous month's levels, although still low overall. It was the index gauging expectations for the next six months that led the decline. Regionally, the South posted the worst performance, falling three points to 15, while the other regions posted slight gains. “As expected, the housing market continues to bump along trying to find a bottom,” said NAHB chief economist David Crowe in a media statement. “Meanwhile, builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes.” Write to Diana Golobay.