Single-Family Housing Starts Slump in May. Multi-Family Metrics Improve

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The U.S. Census Bureau and the Department of Housing and Urban Development today jointly released New Residential Construction statistics for May 2010.

Housing Starts data estimates how much new residential real estate construction occurred in the previous month. New construction means digging has begun. Adding rooms or renovating old ones does not count, the builder must be constructing a new home (can be on old foundation if re-building). Although the report offers up single family housing, 2-4 unit housing, and 5 unit and above housing data, single family housing is by far the most important as it accounts for 70-80% of total home building.

Building Permits data provides an estimate on the number of homes planning on being built. This indicator basically tracks how much future construction activity we should expect to take place in the future. This data is a part of Conference Board's Index of Leading Economic Indicators.

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Excerpts taken from the release...

BUILDING PERMITS
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 574,000. This is 5.9 percent below the revised April rate of 610,000, but is 4.4 percent above the May 2009 estimate of 550,000.

Single-family authorizations in May were at a rate of 438,000; this is 9.9 percent  below the revised April figure of 486,000. Authorizations of units in buildings with five units or more were at a rate of 117,000 in May.

HOUSING STARTS
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 593,000. This is 10.0 percent below the revised April estimate of 659,000, but is 7.8 percent above the May 2009 rate of 550,000.

Single-family housing starts in May were at a rate of 468,000; this is 17.2 percent below the revised April figure of 565,000. The May rate for units in buildings with five units or more was 112,000.

HOUSING COMPLETIONS
Privately-owned housing completions in May were at a seasonally adjusted annual rate of 687,000. This is 7.4 percent below the revised April estimate of 742,000 and is 15.4 percent below the May 2009 rate of 812,000.

Single-family housing completions in May were at a rate of 507,000; this is 7.8 percent below the revised April rate of 550,000. The May rate for units in buildings with five units or more was 175,000.

The biggest contributor to both starts and permits, the South, saw the largest month over month decline in housing starts.  All regions reported a contraction in building permits while the West and Midwest both saw an uptick in housing starts.

Below is a recap of the data...

Plain and Simple: Following the expiration of the homebuyer tax credit, building permits are at a one-year low and single-family Housing Starts saw their largest month over month decline since January 1991. It is important to point out that ALL weakness was seen in the single-family homes category. Multi-family home starts and building permits actually improved in May! Affordable rental housing is in high-demand. READ MORE