Dive Brief:
- U.S. housing starts dropped 11% in May after a major bump in April, but building permits increased 11.8% to their highest level in almost eight years, the Commerce Department reported Tuesday.
- Economists polled by Reuters had predicted a decrease in starts — to a 1.10 million-unit pace — but the real number came in below expectations, at 1.04 million units.
- Building permits, however, rose to 1.28 million units — the highest rate since August 2007. Permits, which indicate future activity in the residential industry, have held above 1 million since July 2014.
Dive Insight:
The multifamily sector saw the greatest dip in starts, falling 20.2%, while single-family starts slipped 5.4%. Groundbreakings fell in all regions of the U.S., with the most significant dip in the Northeast.
The Commerce Department report offers mixed results for the housing market. Reaching April's major hike in starts was unlikely, but May's numbers still disappointed industry experts looking for stronger signs that the housing market is picking up steam.
However, the steep rise in building permits offers positive news for the industry, as it signals starts will likely increase in the coming months. The Commerce Department results were released one day after the NAHB reported builder optimism reached a nine-month high in June.
