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Housing Starts Lose More Ground in May
Providing the latest evidence of the ongoing downturn in the nation’s housing market, the U.S. Commerce Department reported on June 17 that new-home starts declined 3.3% to a seasonally adjusted annual rate of 975,000 units in May, their lowest level since March of 1991.
“Builders are doing the right thing by slowing new production in view of the very weak demand in the market and reluctance of prospective buyers to move forward with a purchase at this time,” said NAHB President Sandy Dunn.
“Production of new homes won’t pick up until the demand side does, and it’s going to take some decisive policy action on the federal level for that to happen,” said Dunn. “It’s high time for Congress to move on a housing stimulus package that will substantially bolster our weakened national economy.”
“This clearly shows that the housing downswing is still underway, with systematic declines in both housing starts and building permits for May,” said NAHB Chief Economist David Seiders.
“It also squares with the results of our own builder surveys, which indicate that builders recognize the fundamental weakness on the demand side of the market and are taking the appropriate steps to limit new inventory,” he said. “Evidence suggests that some pent-up demand is there, but Congress and the Administration need to do what they can to help release it. A temporary home buyer tax credit would be just the incentive that many qualified buyers need to go forward with their homeownership plans.”
Single-family starts fell 1% to an annual rate of 674,000 units in May, their lowest since January of 1991. Multifamily starts — which typically display significant month-to-month volatility — receded 8% to a 301,000-unit yearly rate following a substantial uptick in April.
Regionally, housing starts fell 4.4% in the South, 10.3% in the West and 25% in the Midwest. On the heels of a large decline in April, starts surged 61.5% in the Northeast, a questionable number that is likely to be revised downward next month.
Building permits, which can be an indicator of future building activity, were down 1.3% overall in May to a seasonally adjusted annual rate of 969,000 units. Single-family permits fell 4% to a rate of 623,000 units, while multifamily permits rose 3.9% to 346,000 units.
Regionally, issuance of building permits was mixed in May, with the Midwest and South reporting declines of 7.6% and 8.6%, respectively, and the West and Northeast showing respective gains of 4.1% and 30.6%.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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