Fewer Housing Starts than Predicted


Both the housing starts and the building permits in the United States fell in May. The numbers were considerably lower than what economists had predicted. These figures come despite the growing optimism in the home building industry. The current forecasts are that the downward trend will remain in the coming months.

In May 2014, the housing starts fell by 6.5%. This determined the current seasonally adjusted annual rate to be 1.001 million units. This number is much lower than what analysts predicted. Their forecast was that the seasonally adjusted annual rate would be 1.03 mullion units.

There was a decrease in both the single-family home starts and the multifamily home starts. The former decreased by 5.9% to reach a seasonally adjusted annual rate of 625,000 units. The latter fell by 7.6% to a pace of 376,000 units.

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The number of permits to build homes also fell considerably to reach a much lower rate than the predicted one. The decline was 6.4%. It resulted in a seasonally adjusted annual rate of 991,000 compared to a rate of 1.06 million permits in April. The economists did expect a decrease but they forecasted the rate to be 1.05 million permits. The decrease is much larger than any of the forecasts made.

While the number of permits for single-family homes rose by 3.7% to a pace of 619,000 the number of permits for multifamily units fell dramatically by 19.5% to a rate of 372,000. The increase in the permits for single-family units is the only positive news in the report. Still, this increase is smaller than predicted.

The negative trends will most likely remain in the coming months given the slowdown of the housing market. The demand for new homes remains low due to the reduced affordability of homes, the low inventory and the tighter mortgage requirements. At the same time, investors are pulling out of multifamily units and this has a major negative effect as well.



Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info

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