The housing industry continued to struggle in May, as statistics released this morning by the Census Bureau show. Overall, housing starts fell 3.3 percent, to a seasonally adjusted rate of 975,000, compared to the previous month. Year-over-year, total starts are running 32.1 percent behind May 2007.
Permits, a forward-looking indicator of building activity, also slowed. Compared to April's figures, total building permits dipped 1.3 percent, to a seasonally adjusted annual pace of 969,000. This level of activity is more than one-third (36.3 percent) slower than the same time last year, thanks to a housing market struggling with oversupply.
In terms of single-family numbers, those permits sank 4 percent to 623,000. That represents an (ouch) 41.4 percent year-over-year drop. Regionally, single-family building activity as measured by permits dropped everywhere but the West, which posted a 0.7 percent gain.
"The numbers point to further drops in single-family housing starts over the next two months nationally and in three of the four regions," predicted Patrick Newport, a U.S. economist with Global Insight, a research firm in Lexington, Mass., who believes permits are the figures worth watching. "The key statistics in this report are the single-family permit numbers, since these estimates have a small margin of error, are leading indicators of future housing activity, and are not influenced by weather nearly as much as starts," he said.
Single-family starts also decreased in May, to a seasonally adjusted pace of 674,000 homes. While that qualifies as a yearly drop of more than 41 percent, it's only a minor dip (1 percent) when compared to April 2008's starts numbers.
Alison Rice is senior editor, online, at BUILDER magazine.