Housing Starts Relatively Flat Off of Strength in Multifamily Sector

June 18, 2019

Total housing starts declined 0.9 percent in May to a seasonally adjusted annual rate of 1.27 million units from an upwardly revised reading in April, according to a report from the U.S. Housing and Urban Development and Commerce Department.

The May reading of 1.27 million is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts fell 6.4 percent to 820,000 units. The multifamily sector, which includes apartment buildings and condos, increased 10.9 percent to a 449,000 pace.

"The rise in single-family permits echoes the stabilization we are seeing in our builder confidence survey," said Greg Ugalde, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Torrington, Conn. "While the increase in permits is a positive sign for the housing market, there are still affordability concerns throughout the country, especially in high-cost areas."

"The decline in single-family starts is off a solid upward revision in April," said Danushka Nanayakkara-Skillington, NAHB assistant vice president of forecasting and analysis. "This is another indicator that ongoing builder supply-side concerns are making it more difficult to build homes at affordable price points. We expect single-family housing starts to remain flat through 2019."

Regionally, combined single-family and multifamily starts in May rose 11.2 percent in the South. Starts declined 45.5 percent in the Northeast, 8.0 percent in the Midwest and 2.4 percent in the West.

Overall permits, which are a harbinger of future housing production, edged up 0.3 percent to a 1.3 million unit annualized rate in May. Single-family permits increased 3.7 percent to 815,000, the first increase since November 2018. Multifamily permits fell 5.0 percent to 479,000.

Looking at regional permit data, permits rose 6.8 percent in the South and 1.8 percent in the West. Permits fell 24.6 percent in the Northeast and 8.4 percent in the Midwest.