Housing data from the US showed Housing Start and Building Permits rebounded in May but less-than-expected. Analysts at Wells Fargo point out that a stronger gain in permits points to further improvement in coming months.
Key Quotes:
“Total housing starts rose just 4.3% to a 974,000-unit pace during May, dashing expectations for a stronger recovery following a 26.4% drop in April amid coronavirus-related shutdowns. Many had hoped that starts would be quicker to get back on track, as construction was mostly deemed an ‘essential’ activity and over half of the 422,200 residential construction jobs that were lost in April were added back in May. There were some modest upward revisions to April’s awful outcome, but total starts are still off about 40% from January’s peak of 1.6 million.”
“Perhaps most disappointing was the paltry 0.1% increase in single-family starts. Before the pandemic, single-family starts had been strengthening considerably, and the 675,000 units started in May is 35% below February’s 1 million-unit pace.”
“Despite May’s slight improvement in starts, a more substantial 14.4% gain in building permits offers evidence for a more complete rebound in coming months. The 11.9% gain in single-family permits is a sign that single-family construction should continue to climb.”
“The housing market appears to be holding up fairly well, and while we expect declines for the year in housing starts, residential construction should soon begin to pick back up again.”
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