Permits are up as builders bring back workers laid off in March and April to meet renewed demand
With several signs showing that the housing market is recovering from the coronavirus economic depression, housing production in the US is moving on an upward trend.
Overall permits were up 14.4% to a 1.22 million-unit annualized rate in May, while total housing starts were 4.3% higher than in April, up to a seasonally adjusted annual rate of 974,000 units, according to the latest report from the US Housing and Urban Development and Commerce Department. The monthly reading of 974,000 units is the number of housing units builders would begin if they kept this rate for the next 12 months.
Within the overall housing starts, single-family starts saw a 0.1% uptick to a seasonally adjusted annual rate of 675,000. Single-family permits posted 11.9% month over month gain to a 745,000 pace.
Meanwhile, the multifamily sector was running at a 299,000 pace, up 15% from April through May. Multifamily permits jumped 18.8% to an annualized rate of 475,000 units.
"We are seeing many positive economic indicators that point to a recovery, including low-interest rates, rising demand and an increase in mortgage applications," said Dean Mon, chairman of the National Association of Home Builders (NAHB). "Single-family and multifamily housing production are on an upward path while overall permits, which are a harbinger of future building activity, posted a double-digit gain."
On a regional and annual basis (January through May 2020 compared to that same period last year), combined single-family and multifamily starts were down 1.7% higher in the Midwest, 4.7% higher in the West, 6.7% lower in the Northeast, and 0.2% down in the South.
Year-to-date permit data was lower in all regions except the South, where permits are 0.8% higher. The Northeast reported a 14.8% decline, the Midwest down by 6.2%, and the West experienced a 2.7% drop.
"The May housing report is consistent with the positive results of the NAHB/Wells Fargo builder sentiment index, and we expect this momentum to continue as economic activity recovers," said NAHB Chief Economist Robert Dietz. "In another promising sign, single-family permits are up almost 2% on a year-to-date basis, and builders are bringing back thousands of workers laid off in March and April to meet renewed demand."
