Housing starts charge ahead in May
With the housing market facing a limited supply, privately-owned housing starts rose to the challenge and charged ahead in May.
Total housing starts in May were at a seasonally adjusted annual rate of 1,631,000. This is 21.7% above the revised April estimate of 1,340,000 and is 5.7% above the May 2022 rate of 1,543,000, according to the latest Monthly New Residential Construction report released this morning by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development
Single‐family housing starts in May were at a rate of 997,000, rising 18.5% above the revised April figure of 841,000.
The May rate for units in buildings with five units or more was 624,00, jumping 28.1% above the prior month’s rate and 39.6% from a year ago.
“Mirroring rising builder sentiment, single-family permits and starts increased in May as builders boosted production to meet unmet demand,” said Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala. “Despite elevated interest rates that make the cost of housing more expensive, the lack of existing home inventory in most markets is leading to increased demand for new construction.”
Combined housing permits in May increased 5.2% to a seasonally adjusted annual rate of 1,491,000 compared to the revised April rate of 1,417,000. The latest figure is 12.7% below the May 2022 rate of 1,708,000, however.
Single‐family permits in May were at a rate of 897,000, increasing 4.8% above the revised April figure of 856,000.
Authorizations of units in buildings with five units or more were at a rate of 542,000 in May. This is an increase of 7.8% compared to April, but an 11.9% drop in comparison to the May 2022 rate.
This report follows good news in the latest NAHB/Wells Fargo Housing Market Index (HMI), released by the National Association of Home Builders yesterday. Builder confidence in the market for newly-built single-family homes in June rose five points to a reading of 55.
The latest HMI reading marks six straight months of builder confidence increases.
"The May housing starts data and our latest builder confidence survey both point to a bottom forming for single-family residential construction earlier this year,” said NAHB Chief Economist Robert Dietz. “There have been some improvements to the supply-chain, although challenges persist for items like electrical transformers and lot availability. However, due to weakness at the start of the year, single-family housing starts are still down 24% on a year-to-date basis.”
Here’s how starts and permits performed on a regional basis:
In the Northeast, total starts fell 5.4% compared to April but rose 3.7% on a year-over-year (YOY) basis. Single-family starts are up 8.8% for the month and 12.7% YOY. Total permits jumped ahead 27.1% in May as single-family permits showed no change. Single-family permits declined 12.7% in the region YOY.
In the Midwest, total starts soared by 66.9% in May as single-family starts ascended 59.1%. On a YOY basis, total starts are up 24.2% as single-family starts have seen a 5.2% increase. Total permits in the region move up 7.5% for the month as single-family permits slipped by 0.9%. Combined permits are down nearly 20% from a year ago as single-family permits fell 19% from the same period in the prior year.
In the South, total starts moved up by 20.3% as single-family starts saw a 21% increase. On YOY basis, overall starts are ahead 6.7% but single-family starts declined 3.9%. Total permits edged upward by 1.5% for the month as single-family starts increased 3.3%. Compared to a year ago, total permits are down nearly 14% while single-family permits saw a falloff of 11.4%.
In the West, overall starts are up 16.4% for the month but single-family starts declined 4.1%. Compared to a year ago, total starts saw a slight rise of 1.2% as single-family starts are down 24.5%. Combined permits climbed 6% while single-family permits jumped ahead by 14.5%. Total permits are down 10.6% with single-family permits down 14.7% compared to the same period last year.
