Housing Starts: Surprise Jump in Midwest Skews National Tally

Bottom Line: An unusually large jump in housing starts in the Midwest drove surprise strength in the national tally in May. However, all three other regions saw modest declines in housing starts. Looking through May's regional volatility and the usual volatility of this series, the trend in housing starts remains higher, but there are hints that the upward momentum is waning, just slightly. Building permits declined by 4.6% and, while volatile, suggest weakness in coming months. Single-family permits fell modestly while multi-family permits fell moderately. Housing Starts ROSE by 5.0% in May to 1350k, compared with market expectations for an increase to 1310k. Meanwhile, the prior month was revised slightly lower from 1,287k to 1,286k. Housing starts have been slowly climbing, albeit amid substantial volatility, since reaching their cyclical nadir in April 2009 and are now 20.3% ABOVE their year ago level. However, they are still a sharp 40.6% BELOW their January 2006 peak. Single Family Housing Starts ROSE by 3.9% to 936k. Single family housing starts are 18.3% ABOVE their year ago level but still 48.7% BELOW their January 2006 peak. Multifamily Housing Starts ROSE by 8.4% to 414k. Multifamily starts are now 25.1% ABOVE their year ago level.