US home construction falls for third month in a row
WASHINGTON: US home construction fell in May for the third straight month, with the pace of building hitting its lowest level since September, the Commerce Department reported Friday.
Analysts had been expecting a rebound in homebuilding but the new figures confirmed a downward trend for the start of 2017 and were sure to exacerbate worries about the tight housing supply in the world’s largest economy.
Total housing starts fell 5.5 percent from April to a seasonally adjusted annual rate of 1.092 million, which meant the pace of construction dropped 2.4 percent below the same month of last year. Analysts had projected a 6.1 percent rise for the month.
And the report contained other signs of weakness as well, with April’s already-low result revised down.
Homebuilding was flat in the Northeast at 87,000 new units added, but tumbled in the Midwest and South, with single-family units in the South seeing their biggest monthly decline in two years.
Housing permits, an indicator of construction in the pipeline, also fell, dropping 4.9 percent from the prior month to an annual rate of 1.168 million, well below analyst expectations and the slowest rate in 13 months.
Permits for single-family homes in the Midwest plunged by 12.9 percent, the biggest drop since December 2010.
Industry observers say the current longterm economic expansion has produced an exceptionally tight housing market, with supply outstripped by demand amid rising wages. Analysts say high-cost barriers to construction and a tight labor market contribute to the slow pace.