Housing starts fell 2.1 percent in May to a seasonally adjusted annual rate of 1.474 million units as the correction in the housing market continued, according to figures released by the Commerce Department. Starts were down 24.2 percent from a year earlier.
“Builders still are cutting back on new production as they work down their inventories in the face of slack home buyer demand,” said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif.
“The downswing in new housing production is still underway, although the rate of decline has slowed since late last year,” said NAHB Chief Economist David Seiders. “We still expect starts and permits to bottom out late this year before a systematic recovery process begins in 2008.”
Starts of new single-family homes were down 3.4 percent for the month to a seasonally adjusted annual rate of 1.170 million units. The May pace for single-family construction was 26.0 percent below a year earlier.
Multifamily housing starts increased 3.1 percent to a seasonally adjusted annual rate of 304,000 units for the month. The pace of multifamily construction was 16.0 percent below May 2006.
Total building permits increased 3.0 percent in May to a seasonally adjusted annual pace of 1.501 million units, reflecting a spike in multifamily permits. Total permits were down 21.7 percent from a year earlier.