Builders
started construction of privately-owned housing units in
May at a seasonally adjusted annual rate (SAAR) of 1,572,000 units (1.630
million expected).
This is 3.6% (±10.3%)* above the revised April estimate of 1,517,000
(originally 1.569 million units) and 50.3% (±15.1%) above the May 2020 SAAR of
1,046,000 units; the not-seasonally adjusted YoY change (shown in the table
above) was +50.5%.
Single-family
housing starts in May were at a rate of 1,098,000; this is 4.2% (±9.2%)* above
the revised April figure of 1,054,000 units (+49.0% YoY). Multi-family: 474,000
units (+2.4% MoM; +54.0% YoY).
* 90% confidence interval (CI) is not statistically different from zero. The Census Bureau does not publish CIs for the entire multi-unit category.
Total
completions were at a SAAR of 1,368,000 units. This is 4.1% (±9.8%)* below the
revised April estimate of 1,426,000 (originally 1.449 million units), but 16.1%
(±10.9%) above the May 2020 SAAR of 1,178,000 units; the NSA comparison: +15.7%
YoY.
Single-family housing completions were at a SAAR of 978,000; this is 2.6% (±7.9%)* below the revised April rate of 1,004,000 units (+17.1% YoY). Multi-family: 390,000 units (-7.6% MoM; +12.4% YoY).
Total
permits amounted to a SAAR of 1,681,000 units (1.750 million expected). This is
3.0% (±1.4%) below the revised April rate of 1,733,000 (originally 1.760
million units), but 34.9% (±2.4%) above the May 2020 SAAR of 1,246,000 units;
the NSA comparison: +32.3% YoY.
Single-family permits were at a SAAR of 1,130,000; this is 1.6% (±0.9%) below the revised April figure of 1,148,000 units (+48.4% YoY). Multi-family: 551,000 units (-5.8% MoM; +6.1% YoY).
Rising
material prices and supply chain shortages resulted in builder confidence
dipping to its lowest level since August 2020. The NAHB/Wells Fargo Housing
Market Index (HMI) showed that builder confidence in the market for newly built
single-family homes fell two points to 81 in June. Despite the monthly decline,
the reading above 80 is still a signal of strong demand in a housing market
lacking inventory.
“Higher
costs and declining availability for softwood lumber and other building
materials pushed down builder sentiment in June,” said NAHB Chairman Chuck
Fowke. “These higher costs have moved some new homes beyond the budget of
prospective buyers, which has slowed the strong pace of home building.
Policymakers need to focus on supply-chain issues in order to allow the
economic recovery to continue.”
“While
builders have adopted a variety of business strategies including price
escalation clauses to deal with scarce building materials, labor and lots,
unavoidable increases for new home prices are pushing some buyers to the
sidelines,” said NAHB Chief Economist Robert Dietz. “Moreover, these
supply-constraints are resulting in insufficient appraisals and making it more
difficult for builders to access construction loans.”
The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.
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