by Michelle Jamrisko | Bloomberg
Through all its ups and downs, the U.S. homebuilding industry is making slow progress.
While housing starts declined 11.1 percent in May to a 1.04 million annualized rate, it followed a revised 1.17 million pace the prior month to cap the best back-to-back readings since late 2007, Commerce Department data showed Tuesday in Washington. Permits for future projects climbed to the highest level in almost eight years.
The stop-and-go nature of the rebound, which has been exacerbated by the inclement weather that brought construction to a near standstill at the start of the year, masks a steady recovery in the industry at the center of the past recession. While residential real estate has yet to fulfill its typical role as a pillar of this economic expansion, gains in hiring and bigger paychecks are brightening Americans’ moods and could lift home purchases in the second half of 2015.
“A big decline was almost inevitable after such a surge in April,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York, whose forecast for 1.05 million starts was among the closest in a Bloomberg survey. “With the labor market continuing to improve and unemployment coming down, overall conditions for housing should remain pretty favorable.”
The 11.1 percent drop in housing starts last month followed a 22.1 percent surge in April that was the biggest since January 1990 as the industry recovered from the bitter winter weather.
