Housing Starts, Permits Rise In May
U.S. permits for new home construction edged up in May, offering a small bit of optimism for homebuilders in a difficult market. The number of permits for new housing projects increased to a seasonally adjusted annual pace of 612,000, up from a revised rate of 563,000 in April, according to a Commerce Department report.
The May construction rate was the highest since December and dwarfed the projections of analysts in a recent Briefing.com survey, who had projected starts at a 548,000 rate, on average. Permits for single-family homes, viewed as a more reliable indicator of homebuilding activity than starts in the volatile multi-family home sector, rose 2.5 percent in May to an annual pace of 405,000.
While permits are generally viewed as a good indicator of homebuilders' confidence in the housing market, the big jump in May could have been a result of seasonal factors, even considering the data was adjusted for such factors. Given the improvement in weather seen at this time of the year, it makes for an opportune time to begin construction projects. And given the extreme weather in the U.S. in April and May, many builder were forced to delay projects, which could have inflated the seasonal jump at the end of the spring.
Housing starts, the number of homes builders actually started construction on, climbed 3.5 percent in May to a seasonally adjusted rate of 560,000 from a revised pace of 541,000 in April. Again, the data exceeded economists' expectations, as the analysts in the Briefing.com survey projected a pace of 540,000 on average.
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