Dennis Norman Musings

By: Dennis Norman

This morning the US Census Bureau and US Department of Housing and Urban Development (HUD) issued a their report on New Residential Construction for May 2009 showing a slight increase in new home construction activity.

The report shows the following:

• Building permits issued for single-family residences in May were at an annual rate of 408,000 which is a 7.9% increase over April, but still 35.1% below the rate a year ago.
  • The Midwest region had the largest one month increase at 16.1%, followed by the Northeast at 13.5% the west at 7.5% and finally the South at 6.5%.
• Housing starts for single-family residences in May were at an annual rate of 401,000 which is a 7.5% increase over April but is 40.9% below last year.
  • The South had the largest one month increase in starts at 10.6%, followed by the Midwest at 9.4%, the West at 8.6% and the Northeast actually had a decline of 12.5%
• Single-family homes completed in May were at a rate of 491,000 which is a drop of 9.4% from April and 42.4% down from a year ago.
  • The Midwest region had the smallest monthly decline in completions with a drop of 2.3% followed by the South with a decline of 8.2%, the Northeast with a decline of 11.1% and the West with a 17% decline.

I think overall the numbers look good showing a very modest amount of increased construction activity.  However, some of these statistics have high margins of error (for example housing completions is + or – 7.1% and housing starts are + or – 6.0%) we need to see several months of consistent data for the numbers to really mean anything in terms of the market.