Residential construction in the South took a hit in May, with building permits and housing starts falling sharply, reflecting broader national trends, according to the latest data from the Census Bureau.
Down Across The Board: Building Permits: Fell to a seasonally adjusted rate of 773,000, a 6.6% decline from April and the lowest level since January 2023. Despite this drop, the South still represents 56% of all building permit activity.
– Housing Starts: Decreased to a seasonally adjusted annual rate of 733,000, down 8.5% from April. This figure is still slightly above March’s level, and the South accounts for 57% of all housing starts.
- Completions: Dropped 8.7% to a seasonally adjusted annual rate of 836,000, marking a 12.6% decline from the February high. The South contributes 55% to the nationwide total.
Swing & A Miss: Economists had expected a somewhat positive report with national permits rising 0.6% and starts rising 1.3% when they actually both fell 3.8% and 5.5%, respectively.
Impact on Mortgage Rates: It is clear that higher rates are continuing to put the brakes on the building boom that we saw in ’21 and ’22. Robert Dietz, economist at NAHB, noted yesterday that the only way to lower housing costs will be to lower rates which will encourage builders to keep building.
