U.S. housing starts fell more than expected in May to their lowest level
in five months, a government report showed on Wednesday, as a popular
homebuyer tax credit that had buoyed construction activity over the past
two months expired.
The Commerce Department said housing starts
dropped 10 percent to a seasonally adjusted annual rate of 593,000
units, the lowest level since December. The percentage decline was the
biggest in 14 months. April's housing starts were revised down to show a
3.9 percent increase, which was previously reported as a 5.8 percent
rise.
Analysts
polled by Reuters had expected housing starts to fall to 650,000 units.
Compared to May last year, starts were up 7.8 percent.
New building permits,
which give a sense of future home construction, dropped 5.9 percent to a
574,000-unit pace in May, the lowest in a year. That followed a 10.9
percent drop in April and compared to analysts' forecasts for a rise to
630,000 units.
Housing
starts rose in March and April as new home construction was pushed
forward to take advantage of a government tax credit for home buyers.
Buyers had to sign contracts by April 30 to qualify for the tax credit.
In the wake of the end the tax credit, home
builder sentiment fell sharply in June. Analysts, however, believe the
pullback in housing will be temporary, citing the gradual improvement in
the economy. Demand for loans to buy homes rebounded from 13-year lows
last week.
Groundbreaking
for single-family homes tumbled 17.2 percent to an annual rate of
468,000 units in May after a 5.6 percent increase in April. The
percentage decline in May was the largest since January 1991 and snapped
four months of gains.
However,
starts for the volatile multifamily segment surged 33 percent to a
125,000-unit annual pace.
Home
completions fell 7.4 percent to a 687,000-unit pace.
The inventory of total
houses under construction fell 2.3 percent to a record low 475,000 units
in May, while the total number of units authorized but not yet started
dropped 4 percent to 91,200 units, the lowest since November.
Copyright 2010 Reuters.