US Housing Starts: May 2017

Total housing starts in the US declined in May after a few, strong early months to begin 2017. Total starts were down 5.5 per cent, falling to a 1.092 million seasonally adjusted annual rate, according to the joint data release from the Census Bureau and HUD Friday. Declines were recorded for both single-family and multifamily development.

Single-family starts fell back, declining to a 794,000 annual rate. The February annualized rate, 877,000, was the fastest monthly pace since the Great Recession. Nonetheless, single-family starts are up 7 per cent year-to-date compared to 2016 as limited existing inventory and solid builder confidence make for positive demand conditions.

US Housing Starts

Single-family permits were down 4.9 per cent in May, said the US Census Bureau Friday. There has also been a noticeable increase in the number of single-family homes permitted but not started, consistent with survey data indicating supply-side bottlenecks. For example, in May there were 78,000 single-family homes permitted (on a seasonally adjusted basis) but not started construction. This is almost 15 per cent higher than a year ago.

Multifamily starts dropped again in May for a fifth consecutive month of decline. Five-plus unit multifamily starts fell 10 per cent to a 284,000 seasonally adjusted annual rate. Multi-family five-plus unit permits were also down, falling 10 per cent.

With respect to housing’s economic impact, 57 per cent of homes under construction in May were multifamily (612,000). This multifamily count is almost 6 per cent higher than a year ago, although in recent months this total has flattened, consistent with our forecast. There were 455,000 single-family units under construction, a gain of 6 per cent from this time in 2016. This is slightly lower than the April total (457,000), which was a post-recession high.