New home starts took a step forward despite builders facing the challenges of high lumber prices and shortages of materials, according to the latest residential construction report.
Housing starts in May were at a seasonally adjusted annual rate of 1.572 million, which is 3.6% above the revised April estimate of 1.517 million, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development reported today.
The latest housing starts figure is also 50.3% above the May 2020 rate of 1.046 million.
Single‐family housing starts in May were at a rate of 1.098 million, rising 4.2% from the revised April figure of 1.054 million. The May rate for units in buildings with five units or more was 465,000.
“Single-family starts held firm in May as demand remains strong despite recent gains in new home costs,” said Chuck Fowke, chairman of the National Association of Home Builders (NAHB). “However, single-family permits posted a decline as higher construction costs are deterring some residential construction activity. Policymakers need to help the industry’s supply-chains in order to protect housing affordability.”
Housing permits for May fell 3% to a seasonally adjusted rate of 1.681 million from the revised April rate of 1.733 million,
The latest permit rate is 34.9% above the May 2020 rate of 1.246 million, however.
“Single-family permits declined to the lowest pace since September 2020 as the home building market cools somewhat to adjust to higher prices and longer delivery times of building materials,” said NAHB Chief Economist Robert Dietz. “The count of single-family homes permitted but not started construction is up 53% over the last year due to both gains for home construction since the onset of the 2020 virus crisis and the delay of some building projects due to higher costs for materials and labor.”
Single-family permits slipped 1.6% to 1.13 million from a revised April figure of 1.148 million. Authorizations of units in buildings with five units or more were at a rate of 494,000 in May.
"The trend since the onset of the pandemic has been notably higher single-family homebuilding and subdued multifamily construction," said Lawrence Yun, chief economist of the National Association of Reatlors. "That tilt is a proper response, given the limited single-family home inventory and what had been a deceleration in apartment rent growth."
Here’s how starts and permits break down by region:
- In the Northeast, total starts dropped 22.4% while single-family starts fell 13.7%. Total permits were down 7.1% while single-family permits are down 7.9%.
- In the Midwest, total starts jumped 29.9% as single-family starts surged by 16.6%. Overall permits slipped 2.9% as single-family permits declined 15.1%.
- In the South, total starts were up 3.8% as single-family starts increased 2.8%. Total permits are down 2.3% but single-family permits moved ahead 4.5%.
- In the West, total starts edged up 1.0% as single-family starts grew by 5.4%. Overall permits dropped 3.1% and single-family permits decreased 6.4%.