Multifamily starts were up 33.2% year over year in May, according to the Census Bureau. The total number of housing starts unexpectedly grew in May, growing by the most since 2016 in a surprise reading for economists.It appears homebuilders are racing to bring units onto the market to replace the supply lost over the past year, as a huge run-up in mortgage rates has locked many people in their homes.
For permits to build, which are seen as a proxy for future construction, the seasonally adjusted annual rate of new permits last month was 12.7% below the rate in May 2022. But permits were up 5.2% from April to May. Tuesday’s report is a bit of a bright spot, as it comes as the Federal Reserve’s campaign to slow spending across the economy by hiking interest rates has taken a major toll on the national housing market.
There are other signs the housing market is highly favorable for new construction. This week, the National Association of Home Builders announced that its builder confidence index rose five points to 55, the first time it was in positive territory in nearly a year.