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The New Residential Construction Report for May shows a plunge in housing starts and permits, but a rise in completions.

Building Permits

• Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,393,000. This is 2.0 percent below the revised April rate of 1,422,000 and is 1.0 percent below the May 2024 rate of 1,407,000.
• Single-family authorizations in May were at a rate of 898,000; this is 2.7 percent below the revised April figure of 923,000. Authorizations of units in buildings with five units or more were at a rate of 444,000 in May.

Housing Starts

• Housing Starts Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,256,000. This is 9.8 percent below the revised April estimate of 1,392,000 and is 4.6 percent below the May 2024 rate of 1,316,000.
• Single-family housing starts in May were at a rate of 924,000; this is 0.4 percent above the revised April figure of 920,000. The May rate for units in buildings with five units or more was 316,000.

Housing Completions

• Housing Completions Privately-owned housing completions in May were at a seasonally adjusted annual rate of 1,526,000. This is 5.4 percent above the revised April estimate of 1,448,000, but is 2.2 percent below the May 2024 rate of 1,561,000.
• Single-family housing completions in May were at a rate of 1,027,000; this is 8.1 percent above the revised April rate of 950,000. The May rate for units in buildings with five units or more was 487,000.

Change from Cycle High

• Housing starts are down 31.0 percent from the cycle high of 1.82 million in April of 2022.
• Housing permits are down 27.4 percent from the cycle high of 1.92 million in January of 2022
• Completions are down 13.0 percent from a much later peak of 1.755 million in August of 2024.

Housing Starts 1959-Present

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The boom-bust nature of housing is readily apparent. It is fueled by terrible Fed policies.

Looking ahead, demographics are poor, especially immigration but also increasing supply from peak boomer cliffs.

Housing Starts Single Family vs Multi-Family

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Multi-family has much longer trends than single-family.

Despite the relative strength of single-family, overall trends are down.

Understanding Current Forces

• Immigration drove a huge need for multi-family but Trump put a screeching halt to immigration needs.
• The supply of housing from retiring and dying boomers will accelerate.
• Millennials and Zoomers are having fewer kids. Affordability is a huge issue.
• Mortgage rates are still near 7.0 percent, 6.87 percent as I type.
• Tariffs on steel, aluminum, lumber, and appliances add to building costs. Tariff uncertainty adds to job loss fears.
• Deportation fears abound.

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