In the latest data from the US Department of Commerce, residential construction showed a decline for the month of May in both overall and in single-family starts. Viewed by many as another sign of an economic slowdown, housing is a major component of the overall US gross national product.
See the data on the decline of residential construction starts in May…
Single-family starts, a statistic that more directly impacts the custom integration industry, also saw a drop in May to 820,000 or 6.4% below the revised rate of 876,000 in April. Perhaps more concerning, this rate falls 12.5% below the rate of 937,000 in May 2018.
Regional Results Vary Sharply
Looking at the results based on geographic regions, only the South region booked an increase, with an 11.2% increase in overall and a 3.3% increase in single-family as compared to April. However, single-family starts in the South fell 5.1% as compared to May 2018, while the overall figure increased 8.1% against the year ago period.
However, the Northeast absolutely got slammed, showing declines of -45.5%/-25.8% for the overall/single-family numbers as compared to April’s results. Compared to starts in May 2018, the Northeast overall declined -32.4%, while single-family dropped the same -25.8%.
Declines in Midwest & West Regions are More Moderate
The Midwest and West regions also showed declines, although they were more modest as compared to the Northeast. The Midwest overall and single-family readings as compared to April dropped -8.0%/-5.8%, while the West was -2.4%/-19.9%. Comparing the overall and single-family figures against the same month last year, the Midwest declined -33.1%/-27.6%, while the West declined -0.6%/-14.5%.
Overall, declines in single-family construction seemed to be more severe than the overall figure which includes multi-family dwellings. However, there is some hope – CNBC is reporting that the government has later revised their initial readings upwards…so this month’s numbers may get a bit of a reprieve.
Decline was Unexpected by Economists
This decline in housing starts was unexpected by economists. According to a poll of economists by Reuters, they has expected housing starts to increase in May due to mortgage rates remaining at low levels.