US Housing drops for third straight month
Homebuilders slowed down the pace of construction for the third straight month in May, a possible sign that the shortage of houses for sale might worsen.
The Commerce Department said Friday that housing starts fell 5.5 percent in May to a seasonally adjusted annual rate of 1.09 million units. This comes after a 2.7 percent monthly decline in April and a 7.7 percent drop in March. Home construction is still 3.2 percent higher year-to-date, but that increase has been too modest to address the dwindling supply of homes.
Homebuilders remain optimistic about their sales prospects, but the level of construction has done little to meet demand from would-be buyers. The number of existing homes listed for sale has been registering annual declines for roughly two years – creating a dearth of properties on the market.
“The lack of inventory of homes for sale is one of the most pressing challenges in the housing market today,” said Mark Fleming, chief economist at First American Financial, a title insurance company.
The monthly declines in housing starts come despite a solid job market with a relatively healthy unemployment rate of 4.3 percent. Many analysts expect the job gains to translate into more home construction. What has generally happened is a decline in the construction of apartment buildings that has been more than offset by the gains in the building of single-family houses.
Groundbreakings in the Northeast were unchanged in May and declined in the Midwest and South. Housing starts rose slightly in the West.