After a brief rebound in April, Housing Starts fell sharply by nearly 10% in May, primarily due to a significant decrease in multi-family projects. Single-family home construction remained relatively stable, with only a modest 0.4% increase from the previous month.
Building Permits also declined by 2% overall, and single-family permits fell by 2.7%.
The annualized rates for both Housing Starts (1.26 million) and Permits (1.39 million) are at their lowest so far this year. These figures represent the projected number of housing units if builders continue at the current pace for the next 12 months.
What’s the bottom line?
Although Building Permits generally provide an early view of future housing supply, it’s important to note that many projects with approved permits may not move forward because of higher costs driven by tariffs.
Housing Starts offer a more reliable indication of future housing inventory since construction is already underway. May’s seasonally adjusted annual rate of 1.26 million starts is well below the average of 1.8 million new households formed annually over the past five years.
Even with annual completions at 1.53 million units, the supply of new homes continues to fall short of demand. This ongoing shortage is likely to support home values in the coming months.
