More home construction to come?
Single-family housing starts increased in May — and more permits were issued to build new homes than any month in the past 3.5 years.
There's a good reason for U.S. homebuilders to be more confident heading into the summer, as we reported yesterday: Housing starts for single-family homes rose 3.2% in May compared with April, the Census Bureau and Department of Housing and Urban Development announced today.
Meanwhile, building permits — a barometer for home construction in coming months — also came out strong in May, with requests up 7.9% to a seasonally adjusted annual rate of 780,000. That's the highest level since September 2008.
Overall, housing starts decreased 4.8% from April to a seasonally adjusted annual rate of 708,000. Apartment construction, which fell 21.3%, was the primary culprit.
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Despite the overall dip, the single-family-home data beat analysts' expectations. Single-family housing starts inched up for the third straight month, and April's revised building rate of 744,000 is the highest recorded since October 2008.
Yesterday, the National Association of Home Builders announced that the NAHB/Wells Fargo Housing Market Index, which measures builder confidence in market conditions, hit its highest level in five years. It had reached the same point the previous month, though that reading was later adjusted downward.
Here's how it adds up: For the first year since 2005, analysts say, the housing market may be helping the U.S. economy grow, instead of weighing it down.
"We continue to expect housing activity to increase gradually in coming months and residential investment to make a positive ... contribution to GDP growth," Barclays analyst Peter Newland told The Associated Press.
Data on new-home construction were mixed by region in May. The Northeast, Midwest and South registered month-to-month housing-start decreases — with the Northeast and Midwest also registering decreases in single-family starts. The West had a 14.4% increase in overall housing starts from April to May, as well as a 14.4% increase in single-family starts in the period.
— Tony Stasiek is a producer/editor at MSN Real Estate.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.