US housing starts rose to 1.631 million in May (well above consensus 1.400 million) but from a lower revised total of 1.34 million in April (from 1.401 million). This is at the strongest pace since April 2022. Building permits also rose, to 1.491 million in May (consensus 1.425 million) from a revised total of 1.417 million in April (from 1.416 million). The monthly growth for single-unit permits (+4.8%), is positive as a leading indicator coupled with single-unit starts (+18.5%), a big positive with housing supply challenged overall.
Affordability is the major issue overhanging; mortgage demand hovers near its lowest level since 1997. Single-unit starts are down 28.1% year-over-year and single-family permits being down 21.2% year-over-year.
The move suggests disruption and demographic influences.
The key indicator from the report is the growth seen in single-family starts and single-family permits, a leading indicator which is needed given the limited supply of existing homes for sale.
United States Housing Starts May 2023
- Total housing starts surged 21.7% month-over-month to a seasonally adjusted annual rate of 1.631 million (consensus 1.400 million) following a downwardly revised 1.340 million (from 1.401 million) in April.
- That is the strongest pace of starts since April 2022.
- 5.7 percent (±10.8 percent) * above the May 2022 rate of 1,543,000.
- Single‐family housing starts in May were at a rate of 997,000; this is 18.5 percent (±14.1percent) above the revised April figure of 841,000.
- Multi-units starts with five units or more was 624,000.
- The rise was because of a strong rise in the West (16.4% to 341K), the South (20.3% to 908K) and the Midwest (66.9% to 282K) but fell in the Northeast (-18.7% to 100K).
The housing market had been supported by low interest rates and increasing demand from people moving away from big cities due to the coronavirus crisis, but the momentum slowed with rising inputs amid supply constraints could limit production to ease a shortage of homes. Homebuilding activity has seen an adverse impact from sharply higher mortgage rates on buyer demand and builder sentiment. Further to rising mortgage rates, headwinds come from supply constraints and higher house prices. Rates are now sharply higher (over 6%).
United States Building Permits May 2023
- Total building permits increased 5.2% month-over-month to a seasonally adjusted annual rate of 1.491 million (consensus 1.425 million) following a revision to 1.417 million (from 1.416 million) for April.
- Permits reached the highest level since October 2022; however, they remained 12.7 percent below the level recorded in May of the previous year,
- Single‐family authorizations in May were at a rate of 897,000; this is 4.8 percent above the revised April figure of 856,000.
- Authorizations of units in buildings with five units or more were at a rate of 542,000 in May.
- Permits were up in the South (1.5 percent to 815k), West (6.0 percent to 353k), Midwest (7.5 percent to 187k) and Northeast (27.1 percent to 136k).
Housing Completions
- Privately‐owned housing completions in May were at a seasonally adjusted annual rate of 1,518,000.
- This is 9.5 percent (±12.3 percent)* above the revised April estimate of 1,386,000 and is 5.0 percent (±13.0 percent)* above the May 2022 rate of 1,446,000.
- Single‐family housing completions in May were at a rate of 1,009,000; this is 3.9 percent (±13.9 percent)* above the revised April rate of 971,000.
- The May rate for units in buildings with five units or more was 493,000
Notice of methodology change: Beginning with the January 2022 New Residential Construction release on February 17, 2022, the monthly Building Permits Survey design will change from a representative sample to a cut‐off sample. This change will allow complete local and county data on new housing units authorized by permits to be published on a monthly basis going forward. For additional details on this change and the impact on New Residential Construction, see our FAQ document.
Source: US Census
From The TradersCommunity News Desk