Housing starts in May fell to a level that economists expected, as the homebuilding market continues its drag on U.S. economic growth.
Housing starts came in at a seasonally adjusted annual rate of 1.47 million, down 2.1% from the downwardly revised April estimate, the Census Bureau said Tuesday. On a year-over-year basis, the May housing starts dropped 24.2%.
The overall starts number was helped by an increase in multifamily building starts. Single-family starts, which represent a larger piece of overall construction, fell 3.4% from April.
The drop was essentially in line with economists' expectations of 1.49 million, based on estimates from
"We don't think housing starts have bottomed in the single-family market. We're probably looking at a bottom later this year," says Adam York, an economic analyst with Wachovia. His firm expects housing starts to fall to an annual level of 1.46 million this year and then increase to 1.49 million starts in 2008.
The drag from residential construction on gross domestic product will probably persist until the first quarter of next year, York says.
Building permits, meanwhile, rose to 1.5 million units in May, up 3% from April but down 21.7% from a year earlier, the Census Bureau said.
The data come a day after the National Association of Homebuilders said its builder confidence index fell to the lowest level since 1991, when the U.S. economy was in a recession. The news sent shares of homebuilders
down more than 2% Monday.