Housing starts were reported this morning to have risen in May, with single-family starts up 3.9% and multi-family starts up 5.0%. Both measures saw slight downward revisions on net to previous months' data. The increases in multi-family starts continue a pattern of wild month-to-month swings within a generally flat trend. For single-family starts, the May gains continue a pattern of modest growth, with a lot of month-to-month "chop."
Permits for single-family homes declined in May and have dropped on net over the past three months. Given the historical extent of random fluctuations in this series and given the general uptrends in single-family starts and new-home sales, these recent declines in permits do not appear to be a substantive cloud to what is otherwise an upbeat housing story.
Within the regional news, all the May gains in single-family starts were accounted for by the Midwest, where starts jumped 48% (non-annualized) over April’s level. Then again, the declines reported for single-family starts in the South and West are well within the range of monthly fluctuations and so do not appear to challenge the uptrends both regions are experiencing.
Housing starts and permits data are subject to substantial short-term fluctuations. This is evident from the accompanying chart and also from our guarded comments on the ups and downs reported within today's data. On net, the trends have been upward for housing activity, and there is nothing in this report to suggest an interruption of recent trends, either to the upside or the downside.
Combining the uptrend in single-family construction with flat trends in both multi-family and nonresidential construction, overall construction is growing at around a 1% pace. Again, today's data suggest a continuation of that pace.