WASHINGTON (AP) – New home construction hit a small speed bump in May, with builders pulling back in the Northeast and Midwest markets.
Housing starts ticked down 0.3 percent to a seasonally adjusted annual rate of 1.16 million units, the Commerce Department said Friday. The government's residential construction report can be a bit volatile on a monthly basis, which might explain the slight decrease.
Home construction numbers have otherwise improved through much of 2016, with single-family houses accounting for much of the gain, unlike recent years whose home construction numbers were based more on apartment construction. Housing starts have climbed 10.2 percent compared to the first five months of 2015, a sign of healthy demand, likely spurred by ultra-low mortgage rates and a relatively healthy job market with unemployment at 4.7 percent.
Single-family house starts have climbed 14.5 percent so far this year, evidence that builders are actively courting the growing homeowner market, as opposed to the rental market.
"Single family homebuilders are slowly but surely gaining ground on what has been a strong four years for multifamily construction," said Ralph McLaughlin, chief economist at the online real estate firm Trulia.
Analysts at Bank of America Merrill Lynch expect that single-family home construction will total 800,000 this year. That number would mark solid growth, while yet remaining significantly below the yearly average of 1.04 million that held sway from 1960 to 2000; an indication of how sluggish the recession-and-housing-bust recovery has been since the dark days of 2008.
Applications for building permits, a reliable indicator of future activity, rose 0.7 percent in May to an annual rate of 1.14 million.
Mortgage buyer Freddie Mac said Thursday the average 30-year fixed-rate mortgage is 3.54 percent, down from 4.00 percent a year ago.
Original source by The Associated Press.