US housing starts down 10% in May
US housing starts down 10% in May
BUILDERS broke ground on fewer US homes in May than anticipated after the expiration of a government incentive.
Housing starts fell 10%, the biggest decline since March 2009, to a 5,93,000 annual rate, from a revised 659,000 pace in April that was less than previously estimated, Commerce Department figures showed today in washing-ton. Building permits, a sign of future construction, unexpectedly fell to a one-year low. Single-family starts suffered that largest drop since 1991. Builders focused less on starting new projects and more on completing houses for those seeking to quality for the tax credit, which required contracts be signed by April 30 and closed by the end of this month. Growth in sales and construction will now depend more on job gains and a drop in foreclosures, which have pushed down prices and created competition for builders.
"With the tax credit expiring and sales slowing down, builders will ease up on starts," Michael Moran, chief economist at Daiwa Capita Markets America Inc. in New York, said before the report. "I see the housing market staying neutral for a time, moving sideways rather than being a source of growth." The Labor Department reported on Wednesday that wholesale prices fell in May for the third time in four months. Prices paid to factories, farmers and other producers declined 0.3% after April's 0.1% drop. Excluding food and fuel, so-called core prices climbed 0.2% for a second month. Starts were up 7.8% from the same month last year, year while permits increased 4.4%.
Construction of single-family houses slumped 17%, the biggest drop since January 1991, to a 468,000 pace in May. Permits declined 9.9% after a 10% drop in April. Work on multifamily homes, such as townhouses and apartment buildings, jumped 33% to an annual rate of 125,000.
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