May Housing Starts

Updated 16-Jun-09 09:52 ET

Highlights

Housing starts increased 17.2% in May versus April to an annualized rate of 532K units. Building permits, meanwhile, rose 4.0% to an annualized rate of 518K. Both numbers were better than expected, as the consensus estimates were pegged at 485K and 508K, respectively.
The starts data for May was aided by a 77% increase in starts on multi-unit dwellings, which followed a 46% decline in April.
Single-family residence starts trailed multi-unit starts in a big way, although they were still up 7.5% from April. By region, single-family residence starts were down -12.5% in the Northeast, up 9.4% in the Midwest, up 10.6% in the South, and up 8.6% in the West.

The May data springs both the starts and permits reports from record low levels and will play into the stabilization argument for the housing market; however, with the NAHB reporting a drop in homebuilder confidence in June, the market didn't get worked up over the idea that a meaningful upturn in residential construction activity is right around the corner -- nor should it have.

Housing starts are at extremely low levels and the outlook is not likely to improve any time soon due to high levels of inventories of unsold new homes. An uptrend in consturction will require an improvement in employment and income, and then take some time as inventories need to be reduced. Government action to boost mortgage lending may also help, and starts might stabilize in the second half of the year.

Category	MAY	APR	MAR	FEB	JAN
Starts	532K	454K	521K	574K	488K
1 Unit	401K	373K	361K	357K	357K
Multi Units	131K	81K	160K	217K	131K
Permits	518K	498K	511K	550K	531K