Housing starts rise in single-family segment06/20/2012
Construction activity picked up in May throughout much of the U.S., as a new report indicates housing starts edged northward.
According to the U.S. Census Bureau and the Department of Housing and Urban Development, production on single-family housing units increased by 3.2 percent last month, totaling a seasonally adjusted annual rate of 516,000 units. That's the fastest pace of housing starts since December 2011. In addition, more building permits were issued, jumping nearly 8 percent to 780,000 from April's 723,000, marking the third straight month of positive growth in construction activity.
Barry Rutenberg, chairman of the National Association of Home Builders, noted how this is yet another indication the market is getting better.
"[The] report is a good sign that builders are cautiously moving to replenish their depleted inventories of single-family homes in response to increasing buyer demand," said Rutenberg.
He added that certain housing markets are improving faster than others, as restrictive lending conditions have made purchasing a home difficult for some, preventing buyers from capitalizing on low closing costs and mortgage rates.
While housing starts for single-family units grew, the same couldn't be said for multifamily units. Building activity for multifamily residences plummeted in May, dropping more than 21 percent to 192,000 units. This pushed the overall rate of housing starts down nearly 5 percent to a seasonally adjusted rate of 708,000 units. Multifamily construction was particularly limited in certain regions of the country, as the Northeast, Midwest and South all posted double-digit declines of 20, 13 and 6 percent, respectively.
However, permit activity on a regional level fared well, as three out of four regions saw more building permits being issued, jumping in the Midwest, South and West by 6, 11 and 10 percent, respectively.
David Crowe, chief economist at NAHB, indicated that the increased issuance of permits in the month of May suggests that builders will be busy with housing projects for the foreseeable future.
This latest report comes on the heels of a separate one issued by the NAHB, showing that builder confidence rose in June to 29 in its latest Housing Market Index report. On a regional level, confidence was particularly high in in the Midwest and West, two portions of the country that posted gains on the HMI. Meanwhile, the South and Northeast registered moderate declines.