Housing starts down as we head into summer

June 16, 2017

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By Scott Volling

May housing starts came in at 1,092,000, well below consensus estimates of 1.21 million and down 2.4% year over year. We have been optimistic about the market’s slow and steady recovery based upon consistent year-over-year improvement, so we will need to watch carefully if this is a one-time anomaly or a multi-month trend. The industry is already facing an inventory shortage, which is driving up prices, so these results indicate the demand-supply gap could get worse and further impact affordability for certain segments and markets.

Single family starts, one of our primary indicators of the health of the market, dropped below 800,000 for the first time since September of last year, to 794,000. This is down 3.9% from last month but up 8.5% year-over-year.  The volatile multi-family number dropped 26% from last year, to 284,000.

Permits, a leading indicator of future housing activity, showed a year​-over​-year decrease, dropping 0.8% to 1,168,000. This may indicate some short-term pressure on the monthly housing starts number for the remainder of the summer.


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