The bad economic news keeps building, this time in the housing sector. Housing starts fell an unexpected 5.5 percent in May to a far lower-than-expected annualized rate of 1.092 million with permits likewise very weak, down 4.9 percent to a 1.168 million rate.
All components show declines with single-family starts down 3.9 percent to a 794,000 rate and permits down 1.9 percent to 779,000. Multi-family starts fell 9.7 percent to 298,000 with permits down 10.4 percent to 389,000. Total completions did rise 5.6 percent to a 1.164 million rate, which adds supply to a thin market, but homes under construction slipped 0.7 percent to 1.067 million.
Adding to the bad news are downward revisions to starts including April which is now at 1.156 vs an initial 1.172 million. Looking at the quarter-to-quarter comparison, starts have averaged 1.124 million so far in the second quarter, down a very sizable 9.2 percent from 1.238 million in the first quarter. Permits, at an average of 1.198 million, are down 4.9 percent.
Residential investment looks to be yet another negative for second-quarter GDP.
The last housing starts & permits report was a major disappointment, showing weakness in April and including sharp downward revisions to prior months. There was one positive, though, in the April report and that was strength for single-family starts which helped offset a dip for permits and declines in both starts and permits for multi-units. Forecasters see housing starts bouncing back to a 1.223 million annualized rate in May vs April's 1.172 million with permits seen at a 1.249 million rate vs a revised 1.228 million in April.