The Census Bureau and the U.S. Department of Housing and Urban Development said that housing starts rose from 856,000 in April to 914,000 in May. This continues a major ascent in new residential construction, with year-over-year growth of 28.6 percent and two-year increases of 65.9 percent. Indeed, it is hard to believe that housing starts were just 551,000 in May 2011, illustrating the phenomenal growth in the sector since then.
The bulk of the monthly change in May stemmed from multi-family units up from 259,000 to 315,000. This figure has been highly volatile in 2013 so far, having peaked at 398,000 in March. (As a result, total housing starts were 1,021,000 in March.) New single-family construction was up just slightly for the month, up from 597,000 to 599,000. They have grown 16.3 percent over the past year, up from 515,000 in May 2012.
Meanwhile, housing permits fell back below one million units in May. April’s level had been the highest point since June 2008, but the May number still shows significant growth, up 20.8 percent year-over-year. The pullback was once again in multi-family units, down from 391,000 to 352,000, essentially where it was in February. As with housing starts, permitting among multi-family units has been quite volatile.
Single-family housing permits, on the other hand, increased from 614,000 to 622,000, and this is the key to promised growth ahead. New single-family permitting has risen 24.6 percent in the past 12 months, up from 499,000 last May. This is obviously a sign that the housing market continues to recover, with growth in permits signaling increased construction activity in the second half of this year.
As such, this data mirrors the release from the National Association of Home Builders (NAHB) and Well Fargo. Their Housing Market Index (HMI) increased from 44 in May to 52 in June, its highest point since March 2006. Breaking the 50 threshold was important in that it suggested that more home builders were positive than negative for the first time in over seven years.
The HMI data were higher in every region except for the Northeast. The good news is that the gains seen in the June report are expected to build over the next six months, with the forward-looking measure of singe-family sales up from 52 to 61.
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