New home construction falls in May

Government says the number of single family home starts slipped to a 17-year low.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Ben Rooney, staff writer

Should the government offer financial assistance to Midwest flood victims?
  • Yes
  • No
Mortgage Rates
30 yr fixed 4.01%
15 yr fixed 3.12%
5/1 ARM 3.11%
30 yr refi 4.04%
15 yr refi 3.15%

Find personalized rates:

Rates provided by

NEW YORK ( -- Initial construction of U.S. homes was slightly lower than expected in May, with the number of single family homes hitting a 17-year low, according to a government report released Friday.

Privately owned housing starts fell 3.3% to a seasonally adjusted annual rate of 975,000 in May from April's revised 1,008,000, according to the Commerce Department.

Economists were expecting housing starts to decline to 980,000 from the originally reported 1,032,000, according to a consensus estimate of economists compiled by

Michael Larson, real estate analyst at Weiss Research, said Tuesday's report shows "a market that's stuck in the doldrums."

Larson thinks the largest percentage declines in housing starts are "probably behind us." But he thinks the number of new homes under construction will remain at current levels until builders reduce "their inventory overhang."

The housing market has been stuck with a record number of homes for sale in recent months after a construction boom went bust last summer.

At the same time, demand from home buyers has been weak as the economy has faltered and mortgage lending standards have tightened.

Tuesday's report comes one day after the National Association of Home Builders reported that its measure of homebuilders' confidence matched a record low in June.

The NAHB/Wells Fargo housing market index for June fell 1 point to a seasonally adjusted reading of 18, down from May's reading of 19. A reading below 50 indicates that more builders think home sales conditions are poor than those who think the environment is positive for sales.

Single-family housing starts, considered the core of the real estate market, slipped 1% in May to a rate of 674,000, the lowest annual rate since April 1991.

Applications for building permits fell 1.3% to a seasonally adjusted annual rate of 969,000 last month from a revised 982,000 in April. Economists were expecting 950,000 applications in the month.

Housing starts in the Northeast jumped 61.5% in May and fell 25% in the Midwest. But the regional numbers can vary widely based on weather conditions and a variety of other unpredictable factors.

The drastic changes in the Northeast and Midwest were "anomalies," Larson said. To top of page

Find mortgage rates in your area

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
These 10 food trends could dominate 2015 So long, kale. Here's what's expected to shake up the food industry next year. More
Beyond Russia: Geopolitical hot spots in 2015 Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More
These 20 antique guns could fetch big bucks Morphy Auctions in Pennsylvania is putting nearly 1,000 old guns on the block. Here are just a few. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.