US housing starts in May down by 0.9% to 1.269 million units
May US homebuilding declined, but building permits rose in a mixed housing starts report.
May US housing starts declined by 0.9% to a seasonally adjusted annual rate of 1.269 million units, according to the US Census Bureau and the US Department of Housing and Urban Development. That statistic is a drop from April’s 5.7% increase with a revised rate of 1.281 million units.
May US housing starts details
| Single-family housing starts | -6.4% |
| Multi-family housing starts | +13.8% |
| Building permits | +0.3% |
May US housing starts details
Single-family housing starts plummeted by 6.4% to 820,000 units in May. The decrease in single-family housing starts was possibly caused by heavy rains that delayed construction. Single-family homebuilding fell the most in northeastern, midwestern, and western states. Only southern states experienced home construction growth.
While single-family housing starts dropped, there was positive news for multi-family homes. Multi-family housing starts increased by 13.8% in May to a rate of 436,000 units as rental demand is high.
Building permits also increased for the second straight month by 0.3% to a rate of 1.294 million units in a potentially positive sign for future home construction.
What do economists say about May US housing starts?
Ian Shepherdson, chief economist for Pantheon Macroeconomics, believes that housing data will improve later this year.
‘Single-family permits usually track new home sales but are lagging behind, either because homebuilders doubt the recent revival in sales will last - we [Pantheon Macroeconomics] think it will - and/or because they have too much inventory still after the disastrous drop in sales in Q4 last year. If we’re right, and new home sales rise in the second half of the year, new construction will follow,’ said Shepherdson.
Robert Frick, US Navy Credit Union economist, has a more pessimistic view of the May housing starts report because of a rising demand for housing and stringent building codes.
‘Given restrictive local building codes and expensive labour and materials, home builders are hard-pressed to meet the growing demand for new homes,’ said Frick.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in September 2020.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
