Builders
started construction of privately-owned housing units
in May at a seasonally adjusted annual rate (SAAR) of 1,549,000 units (1.695
million expected). This is 14.4% (±8.9%) below the
revised April estimate of 1,810,000 (originally 1.724 million units) and 3.5% (±10.7%)* below the May 2021 SAAR of 1,605,000 units; the
not-seasonally adjusted YoY change (shown in the table above) was -5.1%.
Single-family
housing starts in May were at a rate of 1,051,000; this is 9.2% (±11.0%)* below the revised April figure of 1,157,000 units (-6.9% YoY).
Multi-family: 496,000 units (-23.7% MoM; -1.1% 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 1,465,000 units.
This is 9.1% (±22.6%)* above the revised April estimate of
1,343,000 (originally 1.295 million units) and 9.3% (±19.0%)*
above the May 2021 SAAR of 1,340,000 units; the NSA comparison: +10.4% YoY.
Single-family completions were at a SAAR of 1,043,000; this is 2.8% (±13.6 percent)* above the revised April rate of 1,015,000 units (+8.2% YoY). Multi-family: 422,000 units (+28.7% MoM; +15.8% YoY).
Total
permits were at a SAAR of 1,695,000 units (1.780 million expected). This is 7.0% below the revised April
rate of 1,823,000 (originally 1.819 million units) but 0.2% above the
May 2021 SAAR of 1,691,000 units; the NSA comparison: +3.0% YoY.
Single-family permits were at a SAAR of 1,048,000 units; this is 5.5% below the revised April figure of 1,109,000 units (-4.7% YoY). Multi-family: 647,000 units (-9.4% MoM; +20.3% YoY).
Rising
inflation and higher mortgage rates are slowing traffic of prospective home
buyers and putting a damper on builder sentiment. In a troubling sign for the
housing market, builder confidence in the market for newly built single-family
homes posted its sixth straight monthly decline in June, falling two points to
67, according to the National Association of Home Builders (NAHB)/Wells Fargo
Housing Market Index (HMI). This marks the lowest HMI reading since June 2020.
“Six
consecutive monthly declines for the HMI is a clear sign of a slowing housing
market in a high inflation, slow growth economic environment,” said NAHB
Chairman Jerry
Konter. “The entry-level market has been particularly affected by declines
for housing affordability and builders are adopting a more cautious stance as
demand softens with higher mortgage rates. Government officials need to enact
policies that will support the supply-side of the housing market as costs
continue to climb.”
“The
housing market faces both demand-side and supply-side challenges,” said NAHB
Chief Economist Robert Dietz. “Residential construction material costs are up
19% year-over-year with cost increases for a variety of building inputs, except
for lumber, which has experienced recent declines due to a housing slowdown. On
the demand-side of the market, the increase for mortgage rates for the first
half of 2022 has priced out a significant number of prospective home buyers, as
reflected by the decline for the traffic measure of the HMI.”
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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