Home Construction, Permits Up for May

June 17, 2011

More building permits were issued last month than we have seen since last year, and that could mean more new home construction in the future.

Privately-owned homes authorized by building permits increased 8.7 percent from April to May to an seasonally adjusted annual rate of 612,000, the Commerce Department said Thursday.

Building permit, a hammer and a rulerThat is not only 5.2 percent higher than the May 2010 estimate of 582,000, it’s the most housing permits awarded since December of last year.

Permits for multi-family homes jumped the most, increasing 23.3 percent as more homeowners are choosing to rent in this economy. Permits for single-family homes rose by a modest 2.5 percent.

“Like consumers, builders remain very concerned about the pace of economic growth and are awaiting signs of improvement before moving forward with new projects,” said National Association of Home Builders (NAHB) Chief Economist David Crowe. “The relative bright spot in new-home construction is on the multifamily side, where improving demand for rental apartments is spurring gains in that sector.”

The good news is that more builders broke ground on new homes last month too, as U.S. home construction increased 3.5 percent in May to a seasonally adjusted annual rate of 560,000. That number, however, is still 3.4 percent below the May 2010 rate.

Housing completions for May also saw an increase, with single-family home completions rising 2.9 percent to 431,000. Combined with multi-family units, housing completions rose only 0.4 percent from April and are 22.5 percent below the rate in May 2010.

“While the upward movement registered in today’s report is somewhat good news, housing production continues to bounce along the bottom near historic lows, and is only running at a level necessary to replace dilapidated or destroyed units,” said Bob Nielsen, NAHB chairman.

The Midwest saw the largest decline in housing production last month, falling 4.1 percent. The Midwest was also the only region of the country to post a decline in the issuance of permits in May, falling 1.1 percent. The other regions — Northeast (35.6 percent), West (15.1 percent) and South (3.5 percent) — all improved for May and can hopefully look forward to some new construction in their future.

About The Author

Read All Stories By Tracey

Leave a Comment