Broad-based 17.2% gain led by 62% rise in multifamily construction
WASHINGTON (MarketWatch) - U.S. housing starts bounced back with a vengeance in May, rising 17.2% to a seasonally adjusted annual rate of 532,000 after plunging 12.9% in April to a postwar low, the Commerce Department estimated Tuesday.
The surprising increase was led by a 62% gain in new construction of multifamily dwellings, the government estimated. Starts of single-family homes rose 7.5% to a 401,000 rate, the highest since November.
Economists surveyed by MarketWatch expected a rebound after April's plunge, but were forecasting a much smaller increase to 485,000 annual rate.
April's starts data were revised lower trivially, to 454,000 from 458,000. It was the lowest rate of housing starts since just after World War II in the late 1940s.
Housing starts are down 45.2% in the past year, and about 75% from the peak. Starts of single-family homes are down 40.9% over the past 12 months.
Building permits rose 4% in May to a seasonally adjusted annual rate of 518,000. Permits for single-family homes rose 7.9% to a 408,000 annual rate, the highest since November.
The government cautions that its monthly housing data are volatile and subject to large sampling and other statistical errors. In the past six months, the average monthly change in starts has been 14%. In most months, the government can't be sure whether starts increased or decreased. In May for instance, the standard error for starts was plus or minus 14.4%. Large revisions are common.
The standard error for building permits is much lower at plus or minus 1.7%.
It can take four months for a new trend in housing starts to emerge from the data. In the past four months, housing starts have averaged 520,000 annualized, up from 509,000 in the four months ending in April.
Details
Housing completions fell 3.3% to a seasonally adjusted annual rate of 811,000, down 28.8% in the past year.
The number of units under construction fell 4.5% to a 655,000 annual rate. Single-family homes under construction dropped 3.9% to 318,000.
Starts increased in all four regions in May. They rose 28.6% in the West, 16.8% in the South, 11.1% in the Midwest, and 2% in the Northeast.
