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Data issued earlier this morning from the Commerce Department affirmed that housing starts and building permits had both fallen back in May, with privately owned starts coming in at an annualized rate of 1.01 million homes for the month. That level was 6.4% below the April rate of 1.071 million homes. Starts had been expected to be at 1.03 million units for May.

At the same time, building permits, a more forward-looking metric, eased as well, totaling 991,000 homes. In April, by comparison, permits had come in at 1.059 million units.

Overall, this was the lowest rate of permits issued since January, when just 939,000 had been taken out. Permits had been above one million annual units in February, March, and April, peaking at the aforementioned 1.059 million homes in April. All told, permits have now been above one million units in six of the past eight months, suggesting that May's slight backtracking isn't much to be concerned about--at least to this point.

Meanwhile, as to actual housing starts, this was the second month in a row that they have been above one million units annualized. Before that they had been between 897,000 and 950,000 homes annually from January through March. Starts had been above a million in November and December of last year.

Breaking the report down by region, starts were down sharply in the Northeast, off by 25.2% last month in that locale--the smallest of the four across the country--while they were off almost 17% in the Midwest--the second smallest in the nation. However, building ticked up nicely in the South, gaining 7.3%. The South is the largest region, with more than half of total building. Starts fell more than 16% in the West, however.

Taken as a whole, this was an underwhelming pair of reports, but given the aggregate totals in both starts and permits, the results were not totally disarming. In fact, with interest rates having come down some and with the overall economy picking up irregular speed, we sense that housing should continue to be a positive economic force going forward this year.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.