Housing construction slowed in May but signs point to a bright future for builders. A report released today by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau found total housing starts declined 4.8 percent in May from April. However, at 708,000 the seasonally adjusted annual rate of housing starts stood 28.5 percent above the figure recorded in May 2011.
Despite the monthly decline, builders took solace in the 3.2 percent monthly increase in single-family housing starts. Single-family construction tends to be less volatile than the multi-family housing construction market that contributed to the overall decline by plummeting 24.2 percent.
“Today’s 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 Barry Rutenberg, chairman of the National Association of Home Builders, in a seperate release. The data comes one day after builders reported their highest confidence level since May 2007.
Further adding to the home builders’ sunny outlook was the rise in building permits. They were issued at a seasonally adjusted annual rate of 780,000, 7.9 percent above the April rate and 25.0 percent greater than the prior-year month.
Only the West posted an overall increase in the number of housing units started. While single-family home construction rose in the South, starts of both single-family and multi-family units declined in the North and the Midwest. — Adam Fusfeld