Housing starts reversed course in May, signaling a slowdown in production, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce.
According to the analysis, housing starts fell 0.9% in May 2019 to a seasonally adjusted annual rate of 1.269 million units.
Navy Federal Credit Union Economist Robert Frick said another weak housing report shows the housing industry is far from producing homes at a rate to satisfy demand.
“Housing starts in May were below both the annualized April rate and the rate from May a year ago, and housing completions in May were also below April’s rate and May 2018’s rate,” Frick said. “Permits rose strongly in May from April, which is good news, but were down from May of last year. Together the numbers show the housing industry continues to slip from last year.”
Single-family production retreated 6.4% from last month to 820,000 units while multifamily starts came in at a seasonally adjusted annual rate of 436,000 units.
Additionally, single-family completions decreased 5% in 2019 to a rate of 890,000, while multifamily starts came in at 319,000 units.
However, permits grew 0.3% in May to a seasonally adjusted annual rate of 1.29 million.
Single-family authorizations increased 3.7% from last month’s rate to 815,000 permits and multifamily permits came in at an annualized rate of 442,000.
“At the current rate, the industry this year will build fewer than the 200,000 needed to keep up with population growth and demand,” Frick said. “Sub 4% mortgage rates should boost demand, but while the rate of home price increases is slowing, it is still rising, putting the dream of homeownership out of the reach of more Americans.”
“Given the restrictions of too little land zoned for housing, restrictive local building codes, and expensive labor and materials, home builders are hard-pressed to meet the growing demand for new homes,” Frick concluded.