The US housing market has been slowly recovering for last few months. But between the months of April and May, housing starts fell 6.5% to a seasonally adjusted annual rate of 1,001,000. The revised April estimate was 1,071,000. The rate, however, is 9.4% more than May 2013 rate of 915000.
With this steep decline, the housing market in US heads to the opposite direction of growth. The decline, however, is not unidimensional. Variations can be observed across regions and construction types. For example, single-family housing starts were at a rate of 619,000 which was down 5.9% from the April estimate of 664000. Multi-Family housing starts, on the other hand, fell 7.6%.
The market doesn’t at all look bullish because it fails in building permit approval also. Approval application for new buildings is a reliable indicator of future growth. The report from US Department of Commerce shows private housing unit authorization in May stood at a seasonally adjusted rate of 991,000 which was 6.4% below the April estimation of 1,059,000 and 1.9% less than May 2013 estimation of 1,010,000.
Housing completion rate is positive. The completion rate was 897,000, which was up 6.8% from April estimation of 840,000. May 2013 estimation of housing completion was 719,000. May completions were above 24.8% from previous year. Single-family completions were up 2.1% from April estimation of 605,000 and multiple unit building completions were at a rate of 269,000, up 16.4% from April estimation of 231,000.
The data points out the housing market is still far away from complete recovery. Economist Jim O’Sullivan has rightly said, “Housing has yet to establish clear upward momentum again.” The Federal Reserve is currently busy in a two-day meeting. The meeting started on Tuesday and will end with the newest decision of policymakers on economic projection.
But some economists don’t think the downturn could be handled effectively in a short time. Economist Diane Swonk said, “the housing market, in particular, remains a question mark as it is not able to gain the traction the Fed expected to see by this time in the economic cycle.”
The builders are however optimistic. They believe the housing market is currently just one level below stability and will improve in the future.