The freefall in housing continues, but with a silver lining:
HOUSING STARTS: Privately-owned housing starts in May were at a seasonally adjusted annual rate of 975,000. This is 3.3 percent (±10.7%)* below the revised April estimate of 1,008,000 and is 32.1 percent (±5.1%) below the revised May 2007 rate of 1,436,000.
Single-family housing starts in May were at a rate of 674,000; this is 1.0 percent (±9.9%)* below the April figure of 681,000. The May rate for units in buildings with five units or more was 280,000.
This is actually a net positive — given the incredible run up in inventory, the reduction of new home starts is positive for the sector.
Note that the 3.3% monthly drop is less than the estimated relative standard error and is therefore not statistically significant. The year over year drop of 32%, however, is much greater than the estimated error, and therefore is statistically significant.
Bloomberg adds: "Rising foreclosures, higher mortgage rates and declining
property values threaten to keep home sales depressed in coming
months, discouraging builders from starting new projects.
Spending on residential projects may continue to be a drag on
growth the rest of this year as builders try to work off excess
Chart courtesy of Barron’s Econoday
NEW RESIDENTIAL CONSTRUCTION IN MAY 2008
Census Department, June 17, 2008
U.S. Housing Starts Drop to Lowest Level in 17 Years
Bloomberg, June 17 2008