Housing starts measure initial construction of residential units (single-family and multi-family) each month. A rising (falling) trend points to gains (declines) in demand for furniture, home furnishings and appliances. Why Investors Care
| Released on 6/19/07 For May 2007 | |||||||||||||||||||||||
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Highlights
Housing starts resumed a downtrend in May. Housing starts in May slipped 2.1 percent, following a revised 1.0 percent increase in April. May's 1.474 million annual rate essentially matched the consensus forecast for 1.47 million units and compared to the initial April estimate of 1.528 million units. In May, single-family starts declined 3.4 percent while multifamily starts posted a 3.1 percent increase. On a year-on-year basis, overall starts are down 24.2 percent in May.
Regionally, starts in April were weakest in the West with a 19.7 percent drop. Starts also declined 1.6 percent in the South. Starts in the Northeast and Midwest rose 15.7 percent and 15.5 percent, respectively.
The one minor story in today's report is that the sharp drop in housing permits in April did not translate into huge weakness in starts in May. In fact, permits rebounded in May, rising 3.0 percent, following April's 7.1 percent drop. Housing permits stood at a 1.501 million unit annual pace, compared to 1.457 in April. All of the improvement, however, was in multifamily units. Single-family permits declined 1.8 percent while multifamily permits increased 16.5 percent. On a year-on-year basis, overall permits are down 21.7 percent in May.
The May starts report shows housing as still weak - much as expected. Today's report should not have much impact on the markets given that expectations were met.
Housing starts continued to edge up in April while permits dropped notably. Weather may have helped starts while permits may reflect continued sluggishness in housing. Housing starts in April rose 2.5 percent to a 1.528 million unit pace, following a 0.3 percent increase the prior month. However, housing permits fell 8.9 percent to a 1.429 million unit pace in April. Given the continued high supply of unsold homes, it is likely that permits are more in line with underlying conditions.
Housing starts Consensus Forecast for May 07: 1.47 million-unit rate
Range: 1.45 million to 1.59 million-unit rate
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Monthly figures are often volatile; housing starts fluctuate more than many indicators. According to the Commerce Department, it takes six months for total housing starts to establish a trend. Consequently, we have depicted total starts relative to a six month moving average. |
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