U.S. Housing Starts Declined in May -- Update
June 18 2019 - 10:38AM
Dow Jones News
By Harriet Torry
WASHINGTON -- A gauge of U.S. home building declined in May, a
fresh sign of weakness in the housing market.
Housing starts fell 0.9% in May from the prior month to a
seasonally adjusted annual rate of 1.269 million, the Commerce
Department said Tuesday. That was a steeper decline than the 0.4%
decrease economists had expected.
The report follows a drop in U.S. home-builder confidence in
June, as builders reported concerns over rising construction costs
and trade issues. The National Association of Home Builders housing
market index fell to 64 this month from 66 in May, the trade group
said Monday.
Tuesday's housing data, "along with a constellation of other
economic factors, could weigh on the Federal Reserve's scales
regarding whether or not they will cut rates, which would
potentially provide some stimulus for the economy and the housing
market," said John Pataky, executive vice president at TIAA
Bank.
Fed officials meet Tuesday and Wednesday in Washington, and are
expected to deliberate whether to lower interest rates should the
economic outlook darken.
There were some bright spots in the Commerce Department's latest
release. Residential building permits, which can signal how much
construction is in the pipeline, rose 0.3% from April to an annual
pace of 1.294 million. That was the strongest monthly rate of
growth since December. The pace of starts in April was revised
higher, another positive sign.
Housing-starts data are volatile from month to month and can be
subject to large revisions. May's 0.9% drop in starts came with a
margin of error of 12.9 percentage points.
Home construction has been cooling more broadly as the overall
housing sector has struggled with high prices and low inventory,
even with a strong labor market and rising incomes. Starts were
down 4.7% from May last year.
Borrowing costs have fallen in recent weeks, which could help
the selling season this summer. A 30-year fixed-rate mortgage
averaged 3.82% for the week ended Thursday, according to Freddie
Mac, near historic lows and down from 4.62% a year ago. The
National Association of Realtors will release existing-home sales
data for May on Friday.
Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
June 18, 2019 10:23 ET (14:23 GMT)
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