"While the overall starts number was essentially flat, both single-family starts and building permits chalked up significant gains last month," said Bobby Rayburn, president of the National Association of Home Builders (NAHB).
"So far in this year's second quarter, average new home production is running at or above par with the very solid first quarter, and we see no signs of any systematic weakening in any of the four regions," said David Seiders, NAHB's chief economist. "As anticipated, the effects of the strengthening economy and job market, along with attractive increases in house values, evidently are overriding the higher interest-rate structure as an influence on home buyers."
According to the NAHB, the decline was entirely on the multifamily side, where a nearly 10 percent dip was recorded to a 327,000 unit rate. Single-family housing starts rose 1.4 percent in the month to an historically healthy seasonally adjusted annual rate of 1.64 million units.
On a regional basis, three of the four regions reported declines in housing starts, with one region (the West) reporting a substantial gain.
Building permits, which can be an indicator of future starts activity, were up 3.5 percent overall to a 30-year high of 2.08 million units in May, with single-family permits rising 3 percent to their highest rate on record - 1.59 million units. Permit issuance for multifamily units was up for the third consecutive month in May to a seasonally adjusted annual rate of 487,000 units.
"Given the solid fundamentals of this marketplace, including relatively thin inventories of unsold units, great house-price performance (for both single-family homes and condos) and excellent demographic projections, we are currently forecasting 1.9 million starts for all of 2004, up about 5 percent from last year," said Seiders.
Publication date: 06/14/2004