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Housing Starts Rise in May Despite Rainy Weather

Builders increased the pace at which they started work on new homes and apartments in May to a seasonally adjusted annual rate of 1.73 million units, the Commerce Department reported last week.

Housing starts were up 6.1% from the previous month, but NAHB President Kent Conine suggested that they might have been even higher had it not been for the unusually wet weather that dampened activity in the East and parts of the Midwest and West.

The annual rate of single-family housing construction climbed 1.5% in May to 1.38 million units as low mortgage interest rates and solid house-price performance continued to stoke home buyer demand.

Multifamily starts, which can show significant volatility from month to month, swung up by 29.2% to a 354,000-unit rate in May.

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The year-to-date construction totals are running ahead of last year's excellent pace in both the single-family and multifamily housing sectors.

NAHB Chief Economist David Seiders said the association's latest surveys have found confidence among builders that sales prospects for single-family homes will remain strong.

“In addition,” Seiders said, “rising backlogs of unused building permits are a good sign that we'll see even more gains in building activity once certain regions begin to see drier weather conditions.”

Regionally, starts rose in the Midwest, South and West by 14%, 7.4% and 0.7%, respectively.

The Northeast posted a 1.3% decline, which most likely was related to the weather.

The issuance of building permits was up 3.7% to a seasonally adjusted annual rate of 1.79 million units. That was the strongest pace since December.

NAHB is projecting 1.7 million housing starts for 2003, about the same as last year.
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