After a much better than expected home builder sentiment report for the month of June, housing data for May came in mixed. According to the Census Bureau, Housing Starts for the month of May came in at a seasonally adjusted annualized rate (SAAR) of 1.036 million, which was 54K below consensus forecasts of 1.09 million. While this represented an 11.1% decline from April’s level, it was the second straight month above the million level, which it dipped below in the winter. While Housing Starts missed the mark, Building Permits surged 11.8% to 1.275 million. This was the largest monthly increase since December 2010 and the highest since August 2007. It was also well ahead of consensus expectations of 1.1 million.
Breaking down Housing Starts and Building Permits by single and multi-family units (chart below), the big driver in both cases was multi-family units. In the case of Housing Starts, multi-family units fell more than 20%, which was nearly four times the decline we saw in single-family starts. In the case of building permits, however, multi-family units accounted for nearly all of the increase in May, rising 24.9% on a m/m basis compared to an increase of just 2.6% for single-family permits. As shown in the lower right chart, permits for multi-family units rose to 592K, which was the highest monthly reading in more than 25 years (January 1990)!
The table below provides a further breakdown of the May Housing Starts and Building Permits reports further broken down by types of units and region. In both reports, the Northeast had a big impact on the headline numbers. In the case of Housing Starts, the Northeast saw a 26.5% m/m decline. For Building Permits, however, the distortion was even more pronounced with a m/m increase of 77.7% to 311K from April’s reading of 175K. In fact, Building Permits in the Northeast accounted for more than 24% of all permits issued in the month of May. Going back to 1959, there have only been three other months (August 1961, January 1967, and June 2008) where the Northeast accounted for that large of a share of total permits issued.