Builders resumed construction last month with a vengeance, according to data released today by the U.S. Census Bureau.
In May, overall housing starts skyrocketed 17.2% compared to the previous month to a seasonally adjusted level of 532,000 units. Single-family numbers also improved, increasing 7.5% on a monthly basis to a 401,000-unit pace.
Building permits, an important indicator of future construction activity and economic growth, rose 4.0% in May on a monthly basis to a seasonally adjusted pace of 518,000 units. And just like housing starts, single-family permits also increased, jumping 7.9% in May compared to April for a 408,000-unit permit pace.
Even more importantly, single-family permits increased in all regions of the country, suggesting that the housing market may be on the mend.
The news pleased industry watchers, which had expected much smaller gains in May.
“Today’s report showing three consecutive months of gains in single-family housing starts and two consecutive months of gains in single-family permits is a very welcome sign that the market may be nearing a turning point,” said NAHB Chief Economist David Crowe said in a statement on the numbers.
Patrick Newport, U.S. economist for IHS Global Insight, agreed. “The construction market for single-family homes is on the mend—and January 2009, when single-family starts and permits hit all-time lows--will mark the low point in the cycle,” Newport said in a report today. “Based on May's numbers, we should continue to see improving housing starts numbers nationally and across all four regions over the next two months. Moving further ahead, single-family starts will continue to improve, but the recovery will be a slow one, lasting two to three years.”
Of course, on an annual basis, May’s construction numbers remain far below last spring. Total building permits are off 47% while single-family permits are down 35.1%. Similarly, overall starts in May were down 45.2% while single-family starts were off 40.9%.
Alison Rice is senior editor, online, at BUILDER magazine.