Housing starts in the US fell 6.5 per cent in May to a seasonally adjusted annual pace of 1.001 million, the Commerce Department said Tuesday. That marked the first decline in four months.
The decline was broad-based across regions and type of construction. Single-family housing starts fell 5.9 per cent, while multifamily fell 7.6 per cent. April’s surge in home building was revised down slightly to 12.7 per cent growth, from 13.2 per cent.
Newly approved applications for building permits, an indicator of future construction, fell 6.4 per cent in May to 991,000 on a sharp decline the volatile multi-family segment.
But in one bright spot, single-family permits jumped 3.7 per cent to 619,000, their fastest rate of increase since September 2012. Single-family construction represents the bulk of the housing market and is considered a better gauge of demand.
Some recent data points to strengthening activity. Housing starts grazed postrecession highs in April, while sales data for that month indicate buyers are coming back into the market. April sales of existing homes—which account for 90 per cent of the market—rose for the first time this year, while sales of new homes jumped 6.4 per cent.
Housing Starts, US
Permits for multi-family housing tumbled 19.5 per cent to a 372,000-unit pace.
Elsewhere, sales of new and existing homes in the US will fall in 2014 for the first time in four years, the Mortgage Bankers Association said in a forecast Thursday.
The MBA lowered its outlook to 5.28 million homes — a decline of 4.1 per cent from the previous year. The industry group also said mortgage lending for purchases would total US$595 billion this year, down 8.7 per cent from 2013, and the first retreat in three years, according to today’s MBA projection.
Rising home prices and stagnant wages make it difficult for Americans to get mortgages amid tight credit standards. The median price of an existing home gained 11.5 per cent last year, second only to the 12 per cent gain in 2005, the highest on record, according to the National Association of Realtors. The median U.S. household income rose less than 1 per cent in 2013, according to data from Sentier Research LLC in Annapolis, MD.