From the WSJ:
A gauge of new-home construction fell in May after several months of gains, the latest sign of the housing sector’s uneven recovery.
Housing starts fell 6.5% in May to a seasonally adjusted annual pace of 1.001 million, the Commerce Department said Tuesday. That marked the first decline in four months and was bigger than the 3.7% drop forecast by economists.
The decline was broad-based across regions and type of construction. Single-family housing starts fell 5.9%, while multifamily fell 7.6%. April’s surge in home building was revised down slightly to 12.7% growth from 13.2%.
“Housing has yet to establish clear upward momentum again,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.
Newly approved applications for building permits, an indicator of future construction, fell 6.4% in May to 991,000 on a sharp decline the volatile multi-family segment.
But in one bright spot, single-family permits jumped 3.7% to 619,000, their fastest rate of increase since September 2012. Single-family construction represents the bulk of the housing market and is considered a better gauge of demand.
In a note to clients, economists from IHS Global Insight described the rise in single-family permits as “one nugget of very good news.”
Overall, Tuesday’s report showed that the road to recovery for the housing industry remains a bumpy one. Home building came roaring back in 2012 and the early part of 2013, only to be derailed by a rise of mortgage rates and a run-up in home prices that sidelined many prospective buyers. An unusually cold winter further depressed housing-market activity over the winter months.