Housing starts declined by a marginal 0.4 percent in
May to a seasonally adjusted annual rate of 1.62 million units, the Commerce
Department reported today, virtually identical to the revised number of
starts it reported for April. Both single-family and multifamily housing
production decreased modestly by 0.2 percent and 1.5 percent, respectively.
"Construction of new housing in the second quarter is holding up well and
remains on par with last year's strong production pace," said Bruce Smith,
president of the National Association of Home Builders (NAHB) and a home
builder from Walnut Creek, Calif.
Single-family starts held firm in May at 1.29 million units, while
multifamily starts showed a 1.5 percent drop to 331,000 units from an
upwardly revised number in April.
"The housing market continues to outperform our expectations, considering
the ominous signs in other sectors of the economy," Smith observed.
However, Smith doubted that housing will remain immune from the economic
slowdown much longer, and predicted a modest slowdown in housing production,
especially if the job market continues to deteriorate. NAHB forecasters are
predicting a 2.5 percent decline in 2001 housing production compared to last
year.
According to Smith, the unanticipated growth in the number of households
formed is an important, underlying factor that is driving the demand for all
types of housing. But Smith credited low mortgage interest rates, roughly
one and a half points below the rates last summer, and strong appreciation
in housing prices for maintaining the current, high level of housing starts.
Nationwide, building permits, which typically indicate future building
activity, increased by 2.1 percent. Single-family permits declined
marginally by 1.6 percent, while permits for multifamily units, typically
the more volatile sector, grew by 14.4 percent in May. Regionally, building
permits fell by 4.7 percent in the Northeast and by 2.4 percent in the West.
In the South, building permits increased by 6.8 percent and by 1.0 percent
in the Midwest last month.
Published: June 20, 2001
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