Housing starts in the U.S rose to their highest level in almost 11 years in May amid an acceleration in both single-family and multi-family home construction. However, a second straight monthly drop in permits implies housing market activities would remain moderate.
New housing starts reached 5.0 percent to a seasonally adjusted annualized pace of 1.350 million units last month, as reported by Reuters. It was the highest level since July 2007. During April, data was revised slightly to show housing starts falling to a rate of 1.286 million units instead of the previously reported pace of 1.287 million units.
Growth was mostly centered in the Midwest, where new construction starts jumped 62.2 percent to their highest level since September 2006. Starts slowed slightly in the South and West, but single family construction in the Northeast advanced as work on new apartment building slowed.
Single-family housing, which accounts for the largest share of the housing market, increased by 3.9 percent to 936,000 units last month. It has lost its drive since hitting a pace of 948,000 units last November, which was the strongest in over 10 years.
Though new construction starts were up, permits for new construction were down 4.6 percent from April, slowing to 1.3 million units instead of the revised estimate of 1.36 million units.
Permits to build single-family homes fell 2.2 percent in May to 844,000 units, an eight-month low. With permits slowing down starts, single-family homebuilding could slow in the months ahead.
Furthermore, the Trump Administration in April 2017 imposed tariffs on imported Canadian softwood lumber causing increases on housing. More expensive lumber along with a lack of land and labor have caused a shortage of homes for sale, hobbling the housing market.
Homebuilders continue to face problems in meeting the demand for housing, as the costs of land, labor, and lumber continue to push prices up across the tight market.