Single-family housing starts were flat in May, albeit off an upwardly revised estimate for construction in April. Single-family starts in May were estimated by Census/HUD at a 675,000 seasonally adjusted annual rate, after an revised estimate of 674,000 for April.
However, the turning point for the market was found in the permits data. Consistent with recent gains in the NAHB/Wells Fargo Housing Market Index (HMI), single-family permits increased almost 12% in May. Total permits for single-family homes issued in 2020 on a year-to-date basis are 1.8% more than the first five months of 2019. An increase in the pace of permits signals gains for single-family starts ahead.
Since the peak rate in February, the pace of single-family construction has declined 35% as of May.
As an indication of how strong the start was for single-family construction in 2020, single-family starts on a year-to-date basis are down just 2.4% relative to the comparable 2019 totals. Thus far, single-family starts are down on a year-to-date basis 23% in the Northeast, 3% in the Midwest, and 3% in the South, but are 4% higher in the West (led by the fast growing Mountain states).
Construction starts for the multifamily sector, which includes apartment buildings and condos, increased 15% to a 299,000 pace in May. This reflects a 52% decline for multifamily construction relative to the strong January pace at the start of 2020. NAHB’s forecast calls for multifamily construction to decline more than single-family construction as a result of the 2020 downturn.
In terms of economic impact, there were 503,000 single-family homes under various stages of construction in May. This was down more than 2% from April and almost 4% lower than a year ago, as the impact of recent months’ single-family starts declines take hold. It is the lowest total since early 2018.
There were 669,000 multifamily units under construction in May, a slight decline from April (675,000). But this total is 10% higher than May of 2019.