US housing starts slipped in May as the construction of multifamily housing units dropped, but there were further gains in building permits.
Groundbreaking fell 0.3 per cent to a seasonally adjusted annual pace of 1.16 million units, the Commerce Department said on Friday. That of single-family homes rose 0.3 per cent to a 764,000-unit pace last month.
US Housing Starts: May 2016
Starts on single-family homes, which account for roughly two-thirds of new construction, rose 0.3 per cent in May. Starts on structures with two or more units sank 1.2 per cent. New applications for building permits increased 0.7 per cent to 1.138 million, from a revised April rate of 1.130 million.
Single-family starts in the Northeast surged 12.7 per cent. In the West, groundbreaking on single-family housing projects rose 1.9 per cent. But single-family starts in the Midwest tumbled 14.7 per cent to a six- month low.
Housing starts for the volatile multifamily segment fell 1.2 per cent to a 400,000-unit pace. The drop followed an 11.9 per cent jump in April. The multi-family segment of the market continues to be supported by strong demand for rental accommodation as some Americans remain wary of homeownership in the aftermath of the housing market collapse.
Multifamily home construction is also being aided by rising household formation as a fairly strong labour market increases employment opportunities for young adults.
Building permits rose 0.7 per cent to a 1.14 million-unit rate last month. Permits for the construction of single-family homes fell 2.0 per cent last month to a 726,000-unit rate, while multi-family building permits increased 5.9 per cent to a 412,000-unit pace.
There was more stability regarding housing completions: single-family housing completions in May were at a rate of 717,000, which is 2.3 per cent above the revised April rate of 701,000, and privately-owned housing completions in May were at a seasonally ad- justed annual rate of 988,000, which is 5.1 per cent above the revised April estimate of 940,000—but, nonetheless, it is 3.5 percent below the May 2015 rate of 1,024,000.