The latest economic indicators from May 2024 reveal a downturn in both building permits and housing starts in the United States, reflecting ongoing challenges in the housing market amid broader economic conditions.

Building Permits Analysis: In May 2024, building permits in the US decreased by 3.8% to a seasonally adjusted annual rate of 1.386 million, falling short of market expectations set at 1.45 million. This decline marks the lowest permit issuance since June 2020. Notably, approvals for units in buildings with five units or more plummeted by 6.1% to 382 thousand, reaching the lowest level reported since May 2017. Similarly, single-family authorizations declined by 2.9% to 949 thousand, marking an eleven-month low.

Housing Starts Overview: During the same period, housing starts in the US fell by 5.5% to 1.27 million units, indicating the lowest level since July 2020 and falling below the anticipated 1.37 million starts. The downturn was led by a 5.2% drop in single-family housing starts, which reached 982 thousand, the lowest since October. Starts for units in buildings with five units or more experienced a sharper decline, plunging 10.3% to 278 thousand, marking a two-month low.

Regional Variations: Geographically, the Midwest saw the most significant decline in housing starts, down 19% to 149 thousand units. The South also experienced a notable decrease of 8.5% to 733 thousand starts, while the Northeast reported a 2.5% decline to 77 thousand. In contrast, housing starts in the West surged by 10.4% to 318 thousand units, showing regional variations in market activity.

These data points underscore the impact of economic factors, including high interest rates, on the US housing market. The declines in both building permits and housing starts suggest challenges in construction activity and market demand, influencing broader economic sentiment and policy considerations.

Moving forward, stakeholders will closely monitor future housing reports and economic indicators to assess the trajectory of the housing market amidst evolving economic conditions and policy responses.

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