Housing Starts Rebounded in May, Permits Still Lag

Residential construction data was mixed for May as reported on Tuesday by the U.S. Census Bureau and the Department of Housing and Urban Development.  Housing starts recovered strongly from their April loss while permits continued lower.

Housing starts were at a seasonally adjusted annual rate of 1,350,000, a 5.0 percent improvement from April's revised, (from 1,287,000) 1,286,000 units.  The May number was up 20.3 percent from the estimate reported for last May of 1,122,000 housing starts.

Starts were right at the top of the estimates provided by analysts to Econoday. They were looking for results in the range of 1,270,000 to 1,350,000 with a consensus of 1,320,000.

Construction was begun on a seasonally adjusted 936,000 single family houses, a 3.9 percent month-over-month gain and up 18.3 percent compared to the previous May.  The rate of single-family starts in April was 901,000 units, revised from the original estimate of  894,000.  Starts in buildings with five or more units increased 11.3 percent from April and 27.4 percent from a year earlier to an annual rate of 404,000 units.

On a non-adjusted basis there were 124,900 residential units put into construction in May compared to 117,600 in April  Single family starts increased to 88,300 from 85,100.

Thus far in 2018 there have been 531,000 housing starts, an 11.0 percent increase over the 478,500 starts in the first five months of 2017. Single family starts are up 9.8 percent for the year-to-date (YTD) to 368,200 versus 335,200 in 2017.

There were 1,301,000 permits issued on a seasonally adjusted annual basis in May, down 4.6 percent from 1,364,000 units in April.  April's number was an upward revision from the original estimate of 1,352,000.  Permitting was 8.0 percent higher than the previous May.

Analysts had been looking for permitting to be in the range of 1,325,000 to 1,385,000. The consensus was for a rate of 1,350,000 units.

Permits for single family construction declined by 2.2 percent to 844,000 seasonally adjusted annual units.  The April estimate was revised from 859,000 to 863,000 and permits are up 7.7 percent from the previous May.  Permits for multifamily construction fell 8.5 percent to 421,000 units but remained 9.1 percent above the 2017 pace.

On a non-adjusted basis there were 124,900 permits issued during the month compared to 119,900 the previous month. The respective figures for single family permits were 84,400 and 79,100.

For 2018 through May there have been 550,600 residential permits issued compared to 505,700 through the same time frame last year, an 8.9 percent increase. Single family permits number 363,700 compared to 335,000, an 8.6 percent gain.

Housing units were completed at an annualized rate of 1,291,000 units, up 1.9 percent from the rate in April of 1,267,000, revised from 1,257,000.  The May rate is 10.4 percent higher than in May 2017. Single family units came on line at an 11.0 percent increase over April and 11.5 percent higher than a year earlier at 890,000.

On a non-adjusted basis there were 109,000 units completed in May, 75,200 of them single-family homes.  The April numbers were 95,400 and 61,300 respectively.

Year-to-date, completions have totaled 471,900, a 10.5 percent increase over the 2017 number through May of 427,100.  YTD for single-family completions is 324,700 compared to 297,000, an increase of 9.3 percent.

At the end of the reporting period there were an estimated 1,127,000 units under construction, 515,000 single family units and 600,000 units in buildings of five or more.  There was a backlog of permits under which construction had not started of 159,000 units, 89,000 of which were single family and 68,000 multifamily residences.

In the Northeast housing starts dropped 15.0 percent from the April pace, but remained 20.0 percent ahead of the previous May.  Permits increased a strong 42.1 percent from the prior month and were up 8.9 percent year-over-year. Completions were down 33.1 percent from April and 26.7 percent on an annual basis.

Starts surged in the Midwest, gaining 62.2 percent compared both to April and to May 2017. Permits were higher by 7.2 percent and 17.4 percent. Completions were off by 12.2 percent for the month but up 18.6 percent annually.

Starts dipped 0.9 percent month over month but are running 16.8 percent over the South's year earlier pace. Permits fell 13.9 percent for the month but remained 4.9 percent higher on an annual basis. Completions were up 14.1 percent and 18.7 percent from the two earlier periods.

Starts were 4.1 percent lower in the West than they were in April and were 4.8 percent higher than in the previous May.  Permits also fell by 4.6 percent from April but were up 8.2 percent compared to a year earlier. There were 3.3 percent more completions during the month than in April and 6.8 percent more than the previous May.