Steel Markets

Housing Starts Improve in May, But Permits Decline

June 16, 2021

Housing starts picked up the pace in May, jumping 3.6% from April to a seasonally adjusted annual rate of 1,572,000, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development. Single-family starts rose 4.2% and construction on homes of five units or more increased 4%.

“Single-family starts held firm in May as demand remains strong despite recent gains in new home costs,” said National Association of Home Builders Chairman Chuck Fowke. “However, single-family permits posted a decline as higher construction costs are deterring some residential construction activity. Policymakers need to help the industry’s supply chains in order to protect housing affordability.”

Permit authorizations, an indicator of future construction, however, fell 3% from April’s rate to a SAAR of 1,681,000. Permits for single-family homes dipped 1.6% and multi-unit authorizations dropped 7.7%.

“Single-family permits declined to the lowest pace since September 2020 as the home building market cools somewhat to adjust to higher prices and longer delivery times of building materials,” said NAHB Chief Economist Robert Dietz. “The count of single-family homes permitted but not started construction is up 53% over the last year due to both gains for home construction since the onset of the 2020 virus crisis and the delay of some building projects due to higher costs for materials and labor.”

Regional data shows combined single-family and multi-family starts compared to April fell 22.4% in the Northeast, but rose in all other regions. Starts increased 29.9% in the Midwest, 3.8% in the South, and 1.0% higher in the West.

Permit authorizations for combined housing types decreased in all regions from the prior month: down 7.1% in the Northeast, 2.6% in the Midwest, 2.3% in the South and 3.1% in the West.