U.S. housing starts dipped in May, nearly reversing a stronger than initially reported April rebound, according to figures released Tuesday by the Commerce Department.
The Commerce Department put the number of privately owned housing starts at a seasonally adjusted annual rate of 708,000 for May.
While the May figure is 4.8 percent below the revised April estimate of 744,000, revised figures put the April rate notably higher than the 717,000 initially reported. The revised figures put April housing starts at the highest level since October of 2008.
Nevertheless, most economists had expected to see at least a small continuation of the growth in May, forecasting an annual rate of housing starts at 720,000.
New building permits, often seen as a leading indicator of future conditions in the housing market, rose significantly more than expected in May, even atop revised figures that showed a higher than initially estimated level of permits in April.
The Commerce Department estimated new building permits for private housing at a seasonally adjusted annual rate of 780,000 in May, 7.9 percent above the revised April rate of 723,000.
Economists had expected building permits to climb to 736,000 from the 715,000 originally reported for the previous month.
With the much bigger than expected increase, the annual rate of building permits rose to its highest level since September of 2008.
Despite the overall drop in housing starts, single-family housing starts remained strong in May, coming in 3.2 percent higher than April levels. By contrast, new construction of housing with five or more units dropped 24.2 percent in May.
Peter Boockvar, managing director at Miller Tabak, said, "Bottom line, single family housing starts continue to show signs of bottoming out from the lowest levels since at least 1959, when the U.S. population was obviously much smaller, but the pace of improvement will still be muted for the same reasons we all still know."
"Multi-family starts, while down, are still up 230% since the bottom in '09 and the jump in permits point to a reacceleration in starts as the home ownership rate continues to normalize," he added.
The divide between single and multiple-family housing starts was reflected in the South, the nation's largest housing market, where overall housing starts were down 6.1 percent but single-family starts were up 3.4 percent.
In the West, overall housing starts and single-family housing starts were both up by the same margin, 14.4 percent.
Single-family housing starts in the Midwest and the Northeast fell by less than the broader slump in new construction.
In the Midwest, single-family housing starts were down 5.4 percent, while overall starts were down 13.3 percent. In the Northeast, a relatively small housing market, new starts were down 20.3 percent overall but down just 4.3 percent in single-family dwellings.
by RTT Staff Writer
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