Housing starts saw an epic drop in May thanks to rising rates and overall concern about a slowing housing market, according to the Census Bureau and HUD…(Census Bureau)
- M-O-M: Privately‐owned housing starts in May were down 14.4% to a seasonally adjusted annual rate of 1,549,000. Economists had only projected a 6.0% decline.
- Y-O-Y: Housing starts were down 3.5% compared to the same time last year.
SINGLE-FAMILY housing starts fell 9.2% in May at a rate of 1,051,000, this is down 4.2% from one year ago.
Building permits did not fair much better in May with a smaller drop for the month but still positive for the year…
- M-O-M: Privately‐owned housing units authorized by building permits fell 7.0% to a seasonally adjusted annual rate of 1,695,000. Economists had only projected a 2.1% decline.
- Y-O-Y: Building permits were up 0.2% compared to the same time last year.
SINGLE-FAMILY authorizations fell 5.5% in May at a rate of 1,048,000, this 7.4% lower than one year ago.
The one silver lining in the report was housing completions that were almost up double-digits for the month and year…
- M-O-M: Privately‐owned housing completions were up 9.1% in May to a seasonally adjusted annual rate of 1,465,000.
- Y-O-Y: Housing completions were up 9.3% when compared to the same time one year ago.
SINGLE-FAMILY completions were up 2.8% in May at a rate of 1,043,000, this is up 6.6% from one year ago.
This was obviously not a good report and it is frustrating to see because we are still extremely underbuilt. This is not dissimilar to the problem we have with oil prices. When prices fall it’s harder to make money drilling and refining oil so oil companies go out of business. As prices fall (or in this case concern about falling prices) puts downward pressure on construction investment. Both scenarios lead to a spike in prices when demand eventually ramps back up. The good news is that despite the big drop, construction levels are still elevated when compared to the last five years. Let’s hope construction doesn’t drop much more than this, especially with home input prices beginning to fall.
