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Single-Family Starts Flat Despite Confidence Surge

One day after the National Association of Home Builders (NAHB) reported the ""sharpest boost in builder confidence"":http://dsnews.comarticles/may-builder-coinfidence-surges-to-7-year-high-2013-06-17 in seven years, the ""Census Bureau and HUD"":http://www.census.gov/construction/nrc/pdf/newresconst_201305.pdf reported single-family starts were essentially flat in May, increasing just 0.3 percent.

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The Census/HUD report Tuesday showed total starts improved 6.8 percent in May, while total permits fell 3.1 percent.

The total number of starts--a seasonally adjusted rate of 914,000--was far below the 955,000 forecast by economists, while total permits--974,000--essentially matched the 973,000 anticipated by economists.

According to the Census/HUD report, completions were at a seasonally adjusted annual rate of 690,000, down 0.9 percent from April, but the number of single- family homes completed rose 4.2 percent to 546,000 from April's downwardly revised 524,000 (about 70,000 more than the 454,000 new homes sold, according to a separate Census/HUD report).

The increase in total starts in May followed a 149,000 (14.8 percent) drop in April. The report continued to show a trend to multifamily activity: In the last 12 months, single-family starts have increased six times, while multifamily starts increased eight times--and of the six months in which single-family starts increased, the increase in multifamily starts was stronger.

The drop in total housing permits in May followed a 115,000 (12.9 percent) increase in April. Multifamily permits fell 39,000 (10.0 percent) from April, while single-family permits increased 8,000 (1.3 percent), the 13th month-over-month increase in the last 14 months.

Single-family permits increased in May to 622,000, the highest level since May 2008. Single-family permits for April were revised down to 614,000 from the originally reported 617,000.

The NAHB reported Monday its Housing Market Index, a measure of builder confidence, improved to 52 in June--the first positive (greater than 50) index reading since April 2006. All three components of the index--current sales, the six-month outlook for sales, and buyer traffic--improved for the second month in a row, with two of them (current sales and the six-month outlook) also registering above 50.

Total starts fell in May in two of the four Census regions, improving in the South to a seasonally adjusted annual rate of 490,000 from 416,000 in April and in the West to 221,000 from 209,000 in April. Starts fell 21,000 in the Midwest to 132,000 and 7,000 in the Northeast to 71,000.

Single-family starts, though, improved in only the South in May, increasing 36,000 to 331,000. Single-family starts fell 16,000 in the Midwest to 92,000; 12,000 in the Northeast to 47,000; and 6,000 in the West to 129,000.

Total permits improved only in the Northeast in May, up 4,000 to 103,000. Permits dropped 17,000 in the South to 498,000; 10,000 to 155,000 in the Midwest; and 8,000 in the West to 218,000. Single-family permits improved in three of the four regions: up 4,000 in the Midwest to 102,000; 3,000 in the West to 135,000; and 1,000 in the Northeast to 53,000. Single-family permits were 332,000 in May in the South, flat to April.

_Hear Mark Lieberman every Friday on P.O.T.U.S. Radio, Sirius-XM 124, at 6:20 a.m. Eastern._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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