Housing Starts: Sharply Below Expectations

June 16, 2017
Bottom Line: Housing starts fell again in May versus expectations for a rebound. While the miss was driven by the volatile multifamily sector, single-family sales were lower, as well. And the overall trend has lost its upward momentum. The three month average is now 1146k, modestly below the 6-month average of 1205k and 2016's average pace of 1177k. Building permits declined by 4.9% and, while volatile, suggest weakness in coming months. Single-family permits fell slightly while multi-family permits fell moderately. Overall, the trends in housing starts suggest a modest softening in the housing segment of the economy. Housing Starts FELL by 5.5% in May to 1092k, compared with market expectations for an increase to 1220k. Meanwhile, the prior month was revised modestly lower from 1,172k to 1,156k. Housing starts had been slowly climbing, albeit amid substantial volatility, since reaching their cyclical nadir in April 2009. However, they are now 2.4% BELOW their year ago level. And they are still a sharp 52.0% BELOW their January 2006 peak. Single Family Housing Starts FELL by 3.9% to 794k. Single family housing starts are 8.5% ABOVE their year ago level but still 56.4% BELOW their January 2006 peak. Multifamily Housing Starts FELL by 9.7% to 298k. Multifamily starts are now 23.0% BELOW their year ago level.