WASHINGTON – According to the National Association of Home Builders , the U.S. Commerce Department reported that new-home starts declined 3.3% to a seasonally adjusted annual rate of 975,000 units in May. This was the lowest total starts number since March of 1991. Single-family starts declined 1.0% to a rate of 674,000 units, their lowest since January of 1991.
“Builders are doing the right thing by slowing new production in view of the very weak demand in the market and reluctance of prospective buyers to move forward with a purchase at this time,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, WV. “Production of new homes won’t pick up until the demand side does, and it’s going to take some decisive policy action on the federal level for that to happen. It’s high time for Congress to move on a housing stimulus package that will substantially bolster our weakened national economy.”
“Today’s report clearly shows that the housing downswing is still underway, with systematic declines in both housing starts and building permits for May,” said NAHB Chief Economist David Seiders. “It also squares with the results of our own builder surveys, which indicate that builders recognize the fundamental weakness on the demand side of the market and are taking the appropriate steps to limit new inventory. Evidence suggests that some pent-up demand is there, but Congress and the Administration need to do what they can to help release it. A temporary home buyer tax credit would be just the incentive that many qualified buyers need to go forward with their homeownership plans.”
Multifamily starts — which typically display significant month-to-month volatility — dropped 8% to a more realistic 301,000-unit rate following a substantial uptick in April.
Housing starts fell in three out of four regions in May, with the Midwest posting a 25% decline from the previous month, the South posting a 4.4% decline and the West showing a 10.3% decline. Only the Northeast posted a gain for the month, with a 61.5% boost following a large decline in April.
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